It can be frustrating when the goalposts shift after you’ve already invested in a stock.
Take the royal banking commission. The big four Aussie banks have struggled under the trust-busting weight of the damning findings — alongside the tens of billions of dollars in customer compensation — since before Kenneth Hayne even wrapped things up.
And that struggle looks set to continue for years. Until 2025, in fact. Australia’s big four banks are in trouble…
From The Australian:
‘A year after royal commissioner Ken Hayne’s final report, former Federal Court judge Ray Finkelstein said the court system would take “five years or so” to deal with cases brought by ASIC…’
If you’re a shareholder of the Big Four banks — and if you’re in a managed super fund you mostly likely are — five more years of bad press won’t come as good news.
Australian Banks Acting Unethically..
Of course, the big four banks arguably have far bigger headaches ahead of them than five more years of unwelcome public reminders they’ve been acting unethically.
One of their biggest challenges is that they’re woefully unprepared for the fast changing pace of technological innovations in the financial industry.
That’s left the Big Four vulnerable to seeing their market share picked apart by tech savvy start-ups. While the newly arrived competition hasn’t eroded the Big Four’s dominance yet, it’s got them alarmed. Now they’re playing a costly game of catch up.
Most of the banks, like Westpac and NAB, have responded by investing directly in promising start-ups.
Commonwealth Bank is taking a different tack. As The Australian Financial Review reports:
‘Commonwealth Bank of Australia chief executive Matt Comyn has said its new in-house start-up incubator will accelerate digital innovation at the institution by creating new companies, rather than following other Big Four banks down the path of passively investing in external players through venture capital funds.’
Comyn said CBA plans to launch 25 new start-ups over the next five years.
Novel approach…or another costly mistake?
Time will tell. But the days of the big banks absolute dominance certainly appear numbered.
Rum Rebellion editor Vern Gowdie wouldn’t touch any of their stock. But then he’s bearish on most of the overvalued stock market.