Westpac was the worst affected, with a 25.4% decline in overall funds under management. Theirs was mostly a decline in superannuation scheme and retirement funds.
However the decline is “a reflection of the relative attractiveness of other investments, the increasing interest rate environment, the strong domestic and international equity markets, and the returns on property,” the survey concludes.
The decline is one of the reasons – though by no means the only one – why many banks are reversing the trend of the late 1990s and are now putting more frontline staff into branches, says KPMG partner Godfrey Boyce.
The banks need to put more “live bodies” into branches if they are to get customers to buy products other than banking, he says.
On regulatory issues, KPMG financial services group chairman Andrew Dinsdale says the suggestion that the Australian Prudential Regulatory Authority (APRA) should act as sole regulatory and supervisor for Australian banks in New Zealand means New Zealand would lose the ability to make its own decision in this area.
There is a danger in this and in other areas of confusing trans-Tasman “harmonisation” with regulation, he says. “Harmonisation can occur without a single regulator, but not without a untied commitment,” he says.
And he points out that although most of the public attention has been on the banking side of the issue; ”It’s been easy to overlook one of the most important regulatory initiatives – that is the widening of the regulatory net to look at regulating non-banks and insurance companies.”
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