Westpac banks on smartphone future
Jason Yetton: 'Seismic' forces are affecting the industry. Photo: Tamara Dean
MOBILE banking is set to become more popular than banking through traditional websites within the next five years, as millions of people start managing their financial affairs through smartphones and tablets, Westpac has predicted.
With the bank forecasting its digital customer numbers will balloon by more than threefold over the period, the trend is likely to change everything from the physical size of branches to the role of ATMs.
Westpac's head of retail and business banking, Jason Yetton, said on Tuesday that the rapid growth in digital transactions was one of several ''seismic'' forces affecting the industry, alongside tougher capital rules and the rise of Asian economies.
Websites currently dominate consumers' interaction with their banks. At Westpac, the number of digital transactions is three times the number of transactions that occur through bank branches.
But with Australians embracing smartphones faster than many countries overseas, the next wave of growth is tipped to be in mobile banking, including using smartphones to make payments for small purchases.
A MasterCard study earlier this year said mobile payments in Australia were ready to ''take off'' - and young wealthy men were most willing to use mobile devices for payments.
Mr Yetton said that by 2017-18, Westpac expected the number of customers using mobile banking to more than triple to 5.2 million, from 1.6 million today.
''We think mobile banking will overtake online in terms of popularity and usage some time within the next five years,'' he said.
While smartphones are heavily used today to transfer money or pay bills, low-value payments - such as paying for a cup of coffee with an iPhone - are tipped to surge in the coming years.
If this occurred, Mr Yetton said the change was likely to be rapid and there could be less need for ATMs, as customers used their smartphones as a substitute for cash.
''The usage of ATMs hasn't materially changed in the last five years, but I think the big revolution will come when you get mobile payments as a capability,'' he said.
Mr Yetton said the typical size of branches was also likely to become about 30 per cent smaller as customers embraced digital banking.
While the number of branches would not necessarily be reduced, he said Westpac would place a growing emphasis on providing personalised services to customers, such as advice on mortgages or business loans.
''The role of the branch has to change from being about the transaction to being about the interaction,'' he said.