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Write a report, based on analysing the retail banking industry of Australia.
The present report is based on analysing the retail banking industry of Australia. Four major banks in Australia such as National Australia Bank (NAB), Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ) and Westpac Banking Corporation have captured 80% of the market share. Therefore, this industry can be considered to follow an oligopolistic market structure. The products are slightly differentiated but are close substitutes of each other. The pricing policies and economic strategies of one bank are heavily dependent on the strategies of other banks. There are also significant barriers to entry and exit in this industry.
The competitive and robust financial system of Australia highly contributes to economic growth and prosperity of this country. Therefore, retail banking industry of Australia is one of the major driving forces of this economy (Balaji 2017). In this regard, the present report has focused on the nature of this industry in Australia. The major features and the associated market structure of Australian retail banking industry have also been analysed in this report. Moreover, economic and pricing policies undertaken in this industry have been evaluated. Effective recommendations for Commonwealth Bank of Australia have been developed. The insights of this report have also been summarised at the end.
Findings and Analysis
2.1 Major features of Australian retail banking industry
Nature of competition and number of sellers
Majority of the market share in the retail banking industry of Australia has been captured by four large public listed banks of this country. These major four banks include National Australia Bank (NAB), Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ) and Westpac Banking Corporation. Around 80% of the market share in this industry has been captured by these banks. The other small banks in Australia have captured the rest of the market share which is 20% of the industry (Aph.gov.au 2018). Hence, there can be noticed few large sellers in the market of Australian retail banking.
Number of buyers
Retail banking is often referred to as consumer banking which offers wide range of financial products and services to the public of a nation. These products and services are also often offered to different business organisations for expanding their business. Thus, the retail banking industry of Australia also serves all the citizens of this country along with all the business corporations of this nation. Thus, there exists large number of buyers in the Australian retail banking industry (Bollen 2015).
Nature of products and services sold in Australian retail banking industry
Varied range of products and services are offered by the large banks in the retail banking industry of Australia. These banks primarily provide insurance and financial services, corporate banking facilities, consumer banking facilities such as savings accounts, credit cards, ATMs, financial transactions, loans etc. Products and services of these banks are also comprised of investment banking, wealth management, mortgages and private equity and others (Howcroft 1991). In this regard, the four major banks in Australia offers distinguished products to a certain extent. The rate of interest in these banks slightly differs from each other. For example, ANZ offers home loans at 5.20% p.a. (Aph.gov.au 2018). On the contrary, CBA offers home loans at 5.22% p.a.
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