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Consolidation is imminent: bank heads

by Jessica Darnbrough7 minute read
The Adviser

The aggregation space can expect to see greater consolidation, various banking heads have claimed.

While smaller aggregation players will continue to play a key role in the third party distribution channel moving forward, some of Australia’s banking heads believe consolidation in this space is imminent.

Speaking to The Adviser, Bankwest’s head of broker sales, Ian Rakhit, said the industry has already seen considerable consolidation to date and that is unlikely to stop any time soon.

“There are some great boutique players in the market at the moment – that are great for competition – and, over time, it won’t be a surprise to see some of them disappear as consolidation becomes more rampant,” he said.

“We are likely to continue to see consolidation as aggregators will need to become large and go national to sustain margins, or decide to stay small and stay specialised as state-based boutiques.”

Mr Rakhit’s thoughts were echoed by Westpac’s general manager, mortgage broker distribution, Tony MacRae, who said tighter margins would force some of Australia’s smaller players to rethink their position in the market.

“As we continue to see margins tighten, volume and book size will become important. Aggregators may see the need to trade on scale, or find a real point of service and support differentiation,” he said.

“So I can see the opportunity for some consolidation; however, there is space for smaller players to really set themselves apart from the industry and take market share.”

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