Current economic conditions are accelerating a recent trend in banking - a focus on core services - as evidence, we offer this series of announcements:

• Some of the banks have sold or are selling other insurance operations. For example, see this story from yesterday https://www.afr.com/street-talk/nab-life-insurance-retreat-set-to-claim-kiwi-arm-bnz-life-20201021-p56724
• And this story from last month about General Insurance https://www.insurancebusinessmag.com/nz/news/breaking-news/westpac-racing-against-cba-in-sale-of-general-insurance-unit--report-233779.aspx
• Then the probable sale of Westpac’s Wealth unit to Forsyth Barr https://investmentnews.co.nz/investment-news/westpac-nz-flags-retail-advice-sale-to-forsyth-barr/
• ANZ selling its finance company arm, UDC. https://www.interest.co.nz/banking/105317/anz-announces-sale-asset-financier-udc-japans-shinsei-bank-which-says-udc-will

Alongside this, traditional branch services are being cut or slimmed down. This shift to digital was given a further shove by lockdowns so the time is right to re-appraise the value of each branch in the network. In addition to that, the value of each service in the branch is being reconsidered as well. With the decision by ANZ to withdraw from offering cash foreign exchange services being announced: https://www.stuff.co.nz/business/123131192/anz-to-stop-offering-foreign-currency-citing-drop-in-demand-due-to-covid19 

Although perhaps this is not just about economic conditions, but also competitive ones. Digital disruption is coming to the world of banking. A slew of online and consumer lenders has been grabbing attention (and high valuations) on the ASX. More challengers are likely to come. This is prompting a strategic rethink by several banks. The regulatory environment is shifting as well, creating more space for the change:

• And the Westpac/Afterpay collaboration allowing Afterpay to offer transaction and savings accounts http://www.sharechat.co.nz/article/4ad7e8d5/westpac-and-afterpay-announce-partnership.html
• We have already referenced between us the Australian change to responsible lending laws being considered and reported on Good Returns. https://www.goodreturns.co.nz/article/976517550/australia-scraps-responsible-lending-laws.html