Industry sectors
Australia and New Zealand have sophisticated financial services industries with a diverse range of participants offering services to institutional and retail customers, and regulatory agencies.
Here is a brief outline of the key sectors:
Investment banking
Investment banks provide financial services geared predominantly to wholesale customers such as large corporations and government entities. Services include corporate finance and merger and acquisition advice as well as securities sales and trading. They also offer some services to retail investors, such as managed funds.
Funds management and superannuation
Fund managers invest, manage and monitor client assets. As a result of its compulsory superannuation savings regime, Australia now has one of the world’s largest and most competitive managed fund markets, with around $AU1.18 trillion1 under management.
In New Zealand a new retirement savings scheme called KiwiSaver is expected to generate significant growth in the superannuation sector.
Stockbroking
Stockbrokers facilitate transactions between retail and institutional investors (those with capital) and issuers of securities (those seeking capital). They provide advice and transactional service for those buying and selling securities in listed markets such as the Australian Securities Exchange (ASX).
Financial planning
Financial planners help individuals create and implement strategies to achieve their financial goals. Financial planning services are delivered under a licensing system which means they can be offered through dealer groups, banks, building societies, credit unions, life insurance companies, stockbrokers, trustee companies, independent financial planning firms, fund managers, accountants and solicitors.
Retail banking
Banks are the largest of the financial intermediaries, providing a wide range of deposit-taking, lending and wealth management services. They also offer business-banking services such as corporate financing and securitisation.
Life and general insurance
Life and general insurers offer a range of products, with some of the main covers including life, accident and disability insurance, as well as home, contents and car insurance. Many insurers often also offer superannuation and managed fund products.
Building societies and credit unions
Building societies and credit unions offer products such as residential mortgages, credit cards, savings accounts and cash management trusts.
Non-bank mortgage lenders
This sector has enjoyed rapid growth in recent years. Unlike traditional banks – who use savings deposits to fund the majority of their loans – non-bank lenders fund their lending from the capital markets.
Regulatory agencies and central banks
In Australia, a number of agencies work to maintain integrity in the financial services sector. They include the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and the Australian Consumer and Competition Commission (ACCC).
In addition to its vital role of managing monetary policy role, the Reserve Bank of Australia (RBA) is tasked with maintaining financial system stability and promoting the safety and efficiency of the payments system.
In New Zealand, registered banks are the dominant financial institutions and are subject to a licensing and supervision framework. Under the Reserve Bank of New Zealand Act 1989, the Reserve Bank has responsibility for the registration and supervision of banks.
1 APRA 2008 December 2007 Quarterly Superannuation Performance, Australian Prudential Regulation Authority, published December 2007, updated April 2008 http://www.apra.gov.au/Statistics/Quarterly-Superannuation-Performance.cfm