Macquarie suggests tech threatens $ 70 billion in revenue at banks like Commonwealth

Macquarie said Square may soon be offering Afterpay users its Cash App products and services, including peer-to-peer payments, market share trading, bitcoin trading, transaction and savings wallets.

British fintech Revolut has applied to the Australian Prudential Regulation Authority for a banking license to offer deposit accounts. He already has over 100,000 Australian users and wants to copy Square and PayPal to create a consumer-focused super app, with services like crypto trading and brokerage-free US stock trading.

Local and venture capital-backed budget brokerage apps including Stake, SelfWealth and Superhero have already stolen income from banks’ retail trading operations, amid record retail trade.

Growing competition

Of the nearly $ 70 billion in revenue at risk, Macquarie said $ 48 billion came from business banking and $ 20 billion from personal banking. The Commonwealth Bank has been identified as the most exposed of the Big Four, as it ranks number one or two in every income-generating pool.

In fiscal 2021, CBA reported $ 10.1 billion net profit on revenue of $ 24.4 billion, with the second-largest player Westpac making adjusted profit of $ 7.4 billion on revenue of $ 20.2 billion. Afterpay and Square combined are expected to have a market cap above the $ 178 billion awarded to CBA on Monday.

“Perhaps the main counterweight to our thesis is that analysts tend to overestimate the extent and timing of disruptions while underestimating likely defensive moves by incumbents,” Macquarie said.

“Overall, however, to have any chance of remaining relevant, we see the need for banks to continue investing and to keep up with more agile competition, which seems contrary to the growing desire of some banks to cut spending. “


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