Banks In Australia

Publication Date :

12 Feb, 2024

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Table Of Contents

What Are Banks In Australia?

The banking system in Australia is very reliable and transparent. The banking sector of Australia is sophisticated and competitive, and it has a strong regulatory system. The banks in Australia have a major role in the country’s financial system.

They offer traditional services and services like business banking, trading in the financial markets, stockbroking, and funds management. As per reports by Moody, the Australian banking system is stable because of strong home prices, rising household debt, and moderate growth in wages.

What Are Banks In Australia?

Banks In Australia Explained

Banks in Australia are an interesting topic of study and discussion, especially for an individual who is planning to relocate to the country for studies or job-related purposes. Banking is a vital part of the economy of the country, and it is equally vital to learn about the system, which will help greatly in managing and maintaining the finances of any individual.

In order to make life easy over there and get access to different modes and means of leading a comfortable life, it is necessary to have a bank account. This will ensure that they have a proper and safe place to keep their money, which can be accessed anytime and anywhere for the purpose of payment of bills for purchases or medical expenses, payment of rent for accommodation, expenses for school, college, and tuition, and every other purpose. This account can also be used by employers to deposit payments or salaries for their employees.

For this purpose, it is essential to have and gain as much information as possible regarding the different good banks of the country, the various types of accounts accounts the best banks in Australia provide, how to open an account, what are the facilities and charges that the individual should look for and understand before selecting a bank, their working hours and services, and of course knowledge about the currency of the country.

Six major forces shape the Australian banking system, changing demographics, technology, consumer behavior, Asian financial condition, government, and a subdued global economy. These forces play a pivotal role in dissipating traditional value drivers in the best banks in Australia, like asset growth and leverage. There are chances of these getting reversed. It leads to a revision of return expectations and future expectations for the industry. The banking system in Australia differs from America. The demarcation line between retail and investment banks has blurred down greatly in Australia.

Structure

The structure of the banking system in Australia is not very complex or difficult to understand. As given in a list in the later part of the article, there are some biggest banks in Australia that are very prominent and play an important role in the functioning of the economic and financial system of the country.

There are some others that are comparatively smaller but still have a county-wide presence and provide banking services, which may not be the same as a proper bank but are limited to some extent. The rules and regulations of the biggest banks in Australia are strict and competitive and follow updated process with sophistication. They are obliged to follow all procedures to act in the best interest of their customers and give the highest level of services which will not only keep their customers happy but also help the financial system run smoothly and transparently.

The Australian banking sector is evolving with time and currently undergoing progressive deregulation and privatization. Now, foreign banks are allowed by the government to enter the financial market. In the current scenario, the retail banks in Australia offer several financial services like life and general insurance, stock brokering, and security underwriting to the retail customers. They also provide corporate and consumer loans to help both individuals and businesses to flourish. Since the retail banks offer a basket of financial services, it directly completes them with the brokerage firms and the merchant banks. Non – Australian foreign banks are allowed by the government to open and operate as branches to cater to the wholesale market. But in this case, retail banking is only permitted through a locally incorporated subsidiary.

The Reserve Bank of Australia (RBA) is at the head, which decides the monetary policy and regulates the payment system. Then, there is the Australian Prudential Regulation Authority (APRA), whose main function is to hold the banks, credit unions, building societies, insurance companies, including general, life, and private health insurance, and the members of the superannuation industry. The Australian Prudential Regulation Authority keeps an eye on the institution whose holdings are nearly $3.7 trillion in assets covering almost 24 million Australian depositors, policyholders, and superannuation fund members.

In Australia, banks require a bank license as per the banking act. Foreign banks also require a permit as they are only allowed to operate through a branch in Australia and via Australian incorporated foreign bank subsidiaries. Banks in Australia can be classified into four major categories. They are:

Nationally operating banks commonly referred to as the major banks
State banks
Regionally operating banks
Foreign banks

The major banks or the nationally operating banks have extensive branches and agency networks because they work throughout Australia. The State banks have their operations within each state. The regionally operating banks are those building societies converted into banks and cater to a niche market. The structure of the Australian banking system is oligopolistic. The Australian market is dominated by four major banks, thus lessening completion and making the market oligopolistic.

Digital Banking In Australia

Australia's digital banking landscape is rapidly evolving, with established banks and fintech startups offering innovative solutions and enhanced customer experiences. It is experiencing significant growth and innovation. Established banks are expanding their digital offerings, focusing on user-friendly mobile banking apps and online platforms.

Fintech startups are also making their mark by providing convenient and specialized digital banking solutions such as neobanks, digital wallets, and payment platforms. The Australian government's regulatory framework supported competition and consumer protection, encouraging collaboration between traditional financial institutions and fintech companies.

List Of Top 11 Best Banks

In this context of the largest banks in Australia, it is interesting to note that the very first bank set us in the country is the Bank of New South Wales, in Sydney. It rapidly expanded and opened branches in various parts of Australia and had dominated the banking sector till the 1960s. Later on the Commercial Banking Company of Sydney and National Bank of Australia came into existence, followed by other noteworthy ones.

In 1983, there was a crisis in the banking sector of the country due to the speculation of a probable boom in the real estate sector of Australia. The situation eventually led to the downfall of many prominent and well-established banks. However, over the years, the sector has re established itself once again into a very successful one. The list below will highlight the largest banks in Australia.

Revolut
Commonwealth Bank of Australia
ANZ
NAB
Westpac
Bank of Queensland
Macquarie Bank
Bendigo Bank
AMP Bank Ltd
Suncorp Bank
Bankwest

In Australia, there are 53 Australian banks, out of which the government owns only 14. Though several small banks are present, four major banks dominate the Australian banking sector- Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group (ANZ), and National Australia Bank (NAB). All these banks have AA- ratings.

#1. Revolut:

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#2. Commonwealth Bank of Australia:

Among the popular banks in Australia, it is a multinational bank in New Zealand, Fiji Islands, Asia, the US, and the UK. This bank was formed in the year 1911 and is headquartered in Sydney. It has more than 11,000 branches, and the number of employees is 42,548 ( Dec 2019). It is the biggest bank in Australia that provides a varied range of services and a basket of financial products. It offers retail, business, institutional banking, and wealth management services.

#3. ANZ:

ANZ bank is among the popular banks in Australia, that was formed in 1835 and is known as one of Australia's best banks that operates in the U.S., Europe, Australia, New Zealand, the Asia-Pacific region, and the Middle East. The bank provides financial services to retail, HNI clients, SMEs, and corporate and commercial customers. It has its headquarters in Melbourne and has nearly 38,479 staff.

#4. NAB:

The merger between the National Bank of Australasia and the Commercial Banking Company of Sydney formed this bank. With headquarters in Docklands, it is present in New Zealand, the U.S., Asia, and Europe.

#5. Westpac:

Westpac was known as the bank of New South Wales and resulted from the merger between BNSW and the Commercial Bank of Australia. It offers services through its five divisions- Consumer Bank, Business Bank, BT Financial Group, Westpac Institutional Bank, and Westpac NZ.

#6. Bank of Queensland:

This bank has its headquarters in Queensland. It offers only retail banking services.

#7. Macquarie Bank:

This bank's headquarters in Sydney offers asset management, finance, banking, advisory and risk, and capital solutions.

#8. Bendigo Bank:

A merger between Bendigo Bank and Adelaide Bank formed this bank. It is one of the largest retail banks in Australia.

#9. AMP Bank Ltd.:

AMP Bank Ltd. is based out of Sydney, offering retail banking services like deposits, residential mortgages, transaction banking services, etc. It is one of the leading wealth management firms in Australia and NZ. Its operation is spread over Asia, the Middle East, Europe, and North America

#10. Suncorp Bank:

Suncorp Bank provides general insurance, banking, life insurance, and wealth management services in Australia and NZ. This bank has its headquarters in Brisbane.

#11. Bankwest:

Bankwest started as a rural lender but became a full-fledged trading bank in 1945. With headquarters in Perth, this bank also has offices in Adelaide, Brisbane, Canberra, Melbourne, and Sydney. It offers personal banking, business banking, commercial banking, agri-business finance, etc.

In Australia, the banks allow its customers to use different methods of payment, like the debit and credit card, the checks linked to the bank accounts, the (Electronic Fund Transfer at Point Of Sale) EFTPOS, at various stores, restaurants and super markets. However, it is necessary for individual to take not of some important points related to banking rules and regulations before opening the account. Things like the fees for application and opening of account, the network or number of branches of that particular bank available throughout the country for easy accessibility, the number of ATMs available, and the languages that can be used to operate them.

There are also some other important things to note, especially if the individual is entering the country for studies of job purpose and intends to stay there for quite a long time of perhaps settle down permanently. Thye should collect information regarding whether there is online bank account opening facility that can be used to open accounts before entering the country, whether any personal banker is provided to the customers and if so, it is necessary to note their language of communication, rules and facilities of a student account and any charges of the same, the minimum deposit needed to open the account and minimum balance to be maintained, rules regarding foreign exchange transfer and type of debit card provided along with their cost. Thus, prior information helps in avoiding any last moment miscommunication and ensures smooth banking experience for everyone.