Financial Industry Analysis in Australia

Finance services form the largest industry in Australia, with many companies and employees working in it. The sector is worth $183 billion as of the 2021 mid-year evaluation and has 62,256 operational businesses employing over 225,500 workers (“Major Australian banks,” 2021). The four leading banks by market share include Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank Limited, and Australia and New Zealand Banking Group Limited (“Major Australian banks,” 2021).

Organizations in the finance industry offer investment products, loans, consumer credits, assets management, and all related services (“Major Australian banks,” 2021). Although the Australian finance sector is vibrant, the management of the major enterprises has to overcome existing and prevailing political, cultural, and contemporary challenges to operate profitably and sustainably.

Regulations, government bodies, and programs that control the finance industry characterize the Australian political environment. Banks are expected to comply with various laws enacted by the government through its diverse organs. Challenges such as conflicting regulations arise and place the industry in a difficult situation. For example, the Australian Privacy Regime (APR) limits the collection of customer data to safeguard privacy, while the Responsible Lending Requirements (RLR) expects lenders to gather as much information as possible from the borrowers (Noakes & Jouan, 2020).

In this case, institutions must strike a balance between compliance with APR and RLR. The Australian Prudential Regulation Authority (APRA) has a new Corporate Plan that will make financial regulations even stricter when it is implemented. However, APRA seeks to strengthen the entire financial industry through higher resilience for banking institutions, better outcomes for superannuation members, improved cyber security for banking systems, and governance modification to enhance answerability across the sector (Deloitte, 2020). As the banking industry in Australia transitions and evolves, major players must create an enabling political environment that supports business prosperity.

Political support should begin with the government and permeate into corporate governance. As banks comply with the laws of the land, the Australian government is responsible for creating the right atmosphere. Top management should adhere to regulations and fiscal policies established to strengthen them in the long term (Noakes & Jouan, 2020). For example, the rebound experienced after the pandemic crippled the economy is the result of fiscal policies developed after the GFC to increase banks’ capital and liquid assets.

Cultural challenges also affect the profitability and sustainability of Australia’s finance sector. A majority unbanked population and the millennial generation pose serious challenges to the finance industry. Many Australians do not use formalized banking structures or insurance services. The management of major banks must devise practical methods of reaching such customers to create new profit avenues.

The fast adoption of technologies, such as smartphones and increasing internet speeds are opportunities for the institutions seeking to onboard the unbanked population. The millennial generation has the highest technology adoption rates, posing a different kind of challenge to the financial industry. Banks must develop techniques of engaging this generation, as it stays online over extended hours per day. The average millennial checks their phone at least 43 times in 24 hours (Carlin, 2019). Institutions must ensure that they are reachable on social networks to attract and maintain loyalty to this group.

As the earning, spending, and lending needs of the Millennials increase, Australian banks must devise strategies to integrate their banking behavior into the industry. Banks must incorporate self-service capability and increase convenience to appeal to this generation (Carlin, 2019). For example, some services could be available around the clock while form filling can be executed from digital devices. Automating experiences like customer service or fraud detection and prevention is critical in digitization (Carlin, 2019). Relationship building and a strong social media presence are other ways of reaching Millennials. Banks must remain transparent to prevent distrust with Millennials (Carlin, 2019). These tactics will ensure that financial institutions remain relevant in a changing generation.

Contemporary issues such as the pandemic and human rights laws have created challenges for the financial services industry in Australia. The coronavirus pandemic hit the world economy, which created a widespread recession in 2020. Australia also suffered a recession that saw financial institutions forced to change their business models and methodologies to adapt. More than 17% of the customers shifted to digital banking, mostly the use of online services and apps (Kearns, 2020).

The banks have reported an almost $10 billion decline in revenues since 2019 (Kearns, 2020). The adverse effects of COVID 19 have surpassed those of the Global finance crisis (GFC) that emanated from within the banking system. Nevertheless, the Australian finance sector has cushioned itself from major losses and collapse while supporting businesses and households across the country (“Australian market for financial services,” 2021). The government intervened promptly through fiscal policy, subsidies, and stimulus packages to support the economy and livelihoods.

Although the sector has experienced a rebound from the effects of the pandemic, management must balance various aspects of sustainability. For instance, banks must attain growth, meet various stakeholder expectations, pay their dividends, and give investors a good return on investment (ROI) (Kearns, 2020). Achieving these outcomes during a transformative period will create challenges for the banking sector. Net interest margins have been under pressure since the June 2021 closing of the Term Funding Facility (TFF). Therefore, banks have to resolve these issues going forward to strengthen their standing.

Human rights breaches form a contemporary issue in the Australian banking sector as most governing boards are not involved. Although institutions have pro-human rights programs and policies, boards do not oversee their implementation (Sheehan & Kinley, 2021). When categories such as privacy, anti-discrimination, participation, economic security, right to remedy, and health and safety are considered, the big four banks in Australia fail to meet the required standards. Over the years, major Australian banks have been involved in violations of human rights through deforestation, land grabbing, and labor abuse involvement in the developing world (Estcourt, 2019). For example, the main four institutions have funded Wilmar International, a company accused of violating human rights for decades in various countries (Estcourt, 2019). The financial services industry must treat human rights issues as crucial rather than marginal to their operations.

In conclusion, management in the Australian finance industry must overcome political, contemporary, and cultural challenges analyzed in this report to operate profitably and sustainably. Major players must create an enabling political environment that supports business prosperity that should begin with the government and permeate into corporate governance. The management should develop ways of onboarding the unbanked population while appealing to the Millennials, as they pose the greatest cultural challenges to the sector.

There has been a positive rebound from the impacts of the pandemic, but institutions must now balance wealth creation with the ongoing transformation occasioned by the crisis. Management boards for various banks should incorporate human rights into their oversight plans and activities to ensure that financial institutions protect individual rights.


The Australian market for financial services grows 13.2% to nearly $10.9 trillion during the 2020/21 financial year. (2021). Roy Morgan. Web.

Carlin, S. (2019). How banks can turn Millennials into lifelong customers. Forbes. Web.

Deloitte. (2020). AFR summit highlights Financing Australia through the crisis. Deloitte. Web.

Estcourt, D. (2019). Big four banks financing companies accused of human rights abuses. The Sydney Morning Herald. Web.

Major Australian banks: Half-year 2021 results analysis. (2021). KPMG. Web.

Noakes, B., & Jouan, L. (2020). Australian banking and the recovery: 5 strategic priorities for banks. BCG. Web.

Kearns, J. (2020). Banking and the COVID 19 pandemic. Reserve Bank of Australia. Web.

Sheehan, K. & Kinley, D. (2021). The financial sector fails the human rights test. The University of Sydney. Web.

Cite this paper

Select style


BusinessEssay. (2022, December 8). Financial Industry Analysis in Australia. Retrieved from


BusinessEssay. (2022, December 8). Financial Industry Analysis in Australia.

Work Cited

"Financial Industry Analysis in Australia." BusinessEssay, 8 Dec. 2022,


BusinessEssay. (2022) 'Financial Industry Analysis in Australia'. 8 December.


BusinessEssay. 2022. "Financial Industry Analysis in Australia." December 8, 2022.

1. BusinessEssay. "Financial Industry Analysis in Australia." December 8, 2022.


BusinessEssay. "Financial Industry Analysis in Australia." December 8, 2022.