Globalisation still to come
Globalisation of the Australian financial services industry could take up to 10 years, says McKinsey and Company managing partner John Stuckey.
"We don't see Australian financial services grasping the opportunities for another five to 10 years," he says.
Part of the reticence is due to the fact that Australian companies don't recognise their own talents.
However, Stuckey says some companies like NAB, AMP, BT and Macquarie have recognised their intangible assets.
These include intellectual property at NAB, powerful sales networks at AMP, wealth management products using the BT brand and Macquarie's ability to attract talent.
"These are examples of companies that have recognised their intangibles and know how to leverage off them," Stuckey says.
"The opportunity now is for companies to specialise and bundle their intangibles for further growth."
He sees a number of actions for Australian companies to undertake if they are to remain competitive when specialist overseas companies enter the local market.
These include recognising the intangibles and leveraging off them; specialising and building scale based on that specialisation.
Australia has already seen the arrival of a number of these specialised companies and some have made an impact on the Australian market. These include Vanguard, which now has $10 billion under management, E-trade and Morningstar.
Entry into the Australian market is hard, Stuckey admits, as the big banks are strong players. According to figures assembled by McKinsey, the banks still have 73 per cent of the mortgage market and 85 per cent of credit cards, although specialist operators have 60 per cent of the wealth-creation market in Australia. The landscape is changing with National buying MLC and Colonial merging with Commonwealth Bank.
Another problem for specialist overseas entrants is distribution. Stuckey admits the lack of totally independent advisers networks in Australia is often a barrier to companies commencing operations in Australia.
"People look at the UK, Canada and Australia as places to launch operations, but take Australia off the list as they see how hard it is to get to the customer," he says.
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