Banking Review

Lessons in the making

OPINION

There’s often no prize for being first in banking, which is why the fast follower strategy is so common. But being second, or for that matter, third, fourth or fifth, is only worthwhile if you learn from those who came before you.

The industry is currently contemplating MAMBO 2.0 (Bankers dance to Mambo), the payment sector’s second go at responding to pressure from the Reserve Bank for innovation in online payments. Getting collaboration among the major banks, in what remains a highly competitive sector, was always going to be a challenge.

BPAY has remained extremely secretive about the project, which suggests there’s still some negotiation underway on what MAMBO will ultimately look like. When it does eventually come to light, we’ll be carefully checking just how much of the original proposal remains, and asking questions about which banks influenced the final outcome.

One Australian sector that seems blind to the mistakes made before is the financial comparison site market (Once bitten, twice shy?), which seems destined to face greater scrutiny over disclosures and more regulation. Anyone interested in what the market might look like in a few years’ time should take a look at the much more mature UK price comparison market, which has already faced and, for the most part, addressed the issues now being raised in Australia.

Lessons do appear to have been learnt in the area of online customer verification, with the Commonwealth Bank setting a higher hurdle for potential customers to pass (CBA verifies all the way). By asking for additional information, the bank has also paved the way for a broader range of online applications, which is likely to prove the security/convenience trade-off can deliver longer term benefits.