ANZ deal could signal the end of Australia’s four pillars policy

ANZ Banking Group chief executive Mr John McFarlane yesterday announced that his bank would be participating in a joint venture with Singapore’s second largest bank, Overseas Chinese Banking Corporation, to establish the first stand alone internet bank in Asia.

Under the arrangement each bank will commit USD100 million over three years with a view to capturing a targeted customer base of 40 million affluent, internet literate consumers within 5 years. A full range of products, including managed funds and credit cards, are expected to be offered. The geographical scope of the strategy encompasses areas from Japan and South Korea to Thailand and Malaysia.

ANZ may now be moving with confidence towards an e-commerce strategy but what does this mean for its position in the Australian banking industry and indeed the industry itself?

Has ANZ decided that size does not matter?

According to today’s Australian Financial Review, ANZ has turned its back on the all-finanze / bancassurance strategies adopted of late by Commonwealth Bank and National Australia Bank effectively ‘down-sizing’ itself to a position within the market as a niche player. From such a position it can concentrate on e-business, service to small and medium-sized business’s and top end retail markets. ANZ has long had the position of leader in the credit cards market in the bag and cannot be touched.

For the Australian banking industry this effectively means not only will ANZ create a new tier for itself between the remaining major banks and the regional banks, but also remain a target for acquistion. It also may create an air of unease for Westpac to operate in as the market speculates on just which way they will jump – and when.