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New HorizonsManaging Growth
Stephen CoulterGeneral Manager Global eCommerce
Commonwealth Bank of AustraliaJune 19, 2001
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The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 19 June 2001. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate.
Disclaimer
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Group StrategyBusiness Goals
To be To be
the best the best
brands in brands in
helping helping
customers customers
manage and manage and
build wealthbuild wealth
To be To be
the best the best
brands in brands in
helping helping
customers customers
manage and manage and
build wealthbuild wealthDevelop offshoreDevelop offshore
opportunitiesopportunities
Global best-practice costsGlobal best-practice costs
Best TeamBest Team
Attract more customers Attract more customers & more revenue per customer& more revenue per customer
Best value service through Best value service through innovation & on-line leadershipinnovation & on-line leadership
Strategic Vision Financial Goal
Top
Quartile
TSR
Top
Quartile
TSR
Growth with lowGrowth with low
inflationinflation
Major technologyMajor technology
shiftshift
WHY?
Pace of changePace of change
Limited longerLimited longer
term domestic term domestic
scopescope
Margin squeezeMargin squeeze
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Index of Top Consistent Performers100.0
99.398.7
97.0 96.8 96.695.9 95.6 95.5 95.4 95.3 95.3 95.2 94.9 94.6 94.4 94.3
93.8
92.7
Idea
l Fir
m
Aeg
on
CB
A
Med
iola
nu
m
No
rth
ern
Tru
st
Cap
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On
e
Ch
arle
s S
chw
ab
BB
VA
Pro
vid
ian
Fin
l.
Ban
k o
f N
ew Y
ork
AIG
Po
wer
Fin
l.
Sw
iss
Re
Am
eric
an E
xpre
ss
Ska
nd
ia
Mel
lon
Gre
at W
est
Lif
eco
Ro
bec
o G
rou
p
Fo
rtis
Source : Oliver, Wyman & Company Report Number 3 Volume 11 March 2001
SP
I th
rou
gh
Dec
emb
er
200
0.
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Flashback Analysts Presentation – May 27, 1999
Banking is now part of the Banking is now part of the information industryinformation industry
Banking andFinancial Services
Tele-Communications
Technology
Media
Information
Customer NeedsCustomer Needs•• TimeTime•• ConvenienceConvenience•• InformationInformation•• Money ManagementMoney Management•• ValueValue•• TrustTrust
Analyst Presentation, May 27, 1999
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Flashback Analysts Presentation – May 27, 1999
Relationships built around customer needs, brand Relationships built around customer needs, brand and multiand multi--channel accessibility will be channel accessibility will be
Commonwealth’s strengthCommonwealth’s strength
Brand
Customers
Accessibility
Experience
Analyst Presentation, May 27, 1999
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Flashback Analysts Presentation – May 27, 1999
Strategic PrioritiesStrategic Priorities
1.1. Win the strategic battlesWin the strategic battles
–– Relationships, Alliances, PositioningRelationships, Alliances, Positioning
2.2. Implement endImplement end--toto--end model to enable end model to enable cost savings to be cost savings to be realisedrealised
3.3. Harvest the cost savings Harvest the cost savings
Analyst Presentation, May 27, 1999
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Commonwealth Group Home Page
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Strategic battles around relationships have been successful….
Measure Jun 99 Jun 00 Jun 01 estNetBank 89,400 325,000 900,000Quickline 23,600 36,000 50,000MobileBank - 6,500 17,000Diammond/eCommCorporate 6,100 7,300 8,000ASB/BankDirect 18,000 58,000 100,000Banking 137,100 432,800 1,075,000
ComSec Online 60,000 155,000 225,000
HomePath - 36,000 100,000
Total Online Customers 197,100 623,800 1,400,000
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As have our alliances...
Alliances
Ma
rket A
ccess
Technology/Skills Access
Scale
Econ
om
ics
Risk Sharing
• Australia Post• Woolworths Ezy Banking• ninemsn
• EDS• Telecom NZ• Vodafone• KeyCorp• CommerceNet• Knowledge Lab• Cyberlynx
• EDS• Telecom NZ• ninemsn• Cyberlynx
• EDS• TelecomNZ• Vodafone• SupplySearch• KeyCorp• Cyberlynx
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Customers are moving transactions and business activities online
• Transactions– December 2000 profit announcememt we advised 84% of
transactions are now electronic versus 16% over the counter
– Over 1,800 online merchants
– Over $10 billion in payments through NetBank
– 80% of Commsec trades occur online
– Total transactions of 34 million online in April 2001
• 4m in 98, 8.5m in 99 and 18.5m in 2000
• Sales– Over 4,000 credit and 10,000 deposit account applications per
month online
• Inquiries– Over 17 million service enquiries per month via NetBank
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Commonwealth Group is applying web technologies to its own business
• Finance and Human Resources with PeopleSoft
• IP enablement of all premises
– Target of end July for all branches to be cabled
• eProcurement with Cyberlynx
• Growing intranet applications and information
– Over 2 million activities per week
• Online Shareholder and Media Centres
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Intranet Development & Usage is Improving
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Shareholder Centre for Investors
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Cyberlynx has been successfully implementedi n
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Looking Forward……….
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Commonwealth’s Online Vision
Retain and attract commercially astute, eCommerce aware people
Customer focussed information
Network and device independent
Anything, Anywhere, Anytime
Decision support, Information, Education and Advice
Web enable our enterprise
Requirements
“ In chosen markets,to be the leading global provider of online information services
related to financial services in a profitable manner.”
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s o
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n s There is no “new economy”
• There is one economy• There are old and new ways of doing business• Old truths still prevail
– Customers
– Products and Distribution
– Returns to owners
– Employees – retain and attract
– Community – support and earn respect
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The only sustainable competitive advantages will be customer
service and trust
• Products are commoditising
• Price differences will narrow
• Low costs will be a hygiene factor
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Customer Performance Model
CustomerAcquisition
CustomerRetention
CustomerShare of Wallet
CustomerValue
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NetBank customers are valuable
Product Penetration Balance vs
Average Customer Online Customers Average Customer
Credit Cards 31% 76% 130%
Loans 14% 46% 178%
Deposits 81% 98% 100%
• Online Customers also make significant use of the Internet for product origination, enquiries and transactions.
• These are the tip of an online-influenced iceberg– Cross Channel referrals and service are vital
– Monitor sales rates by origination point
– Monitor quality of business by origination point
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• Better customer service leading to revenue growth
• Lower internal delivery cost
• Quicker time-to-market
• Lower distribution costs
Organisations are now realising the power and value delivered from end-to-end web enablement
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• Identification• Authentication• Security• Privacy• Integrity (Data & Message)• Fairness & Honesty• Experience• Stability
Trust based services will grow……..
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Account AggregationBring My Information Together at One Web Site with
one user name and password.
Site User Name PasswordCommonwealth Bank abcdef 123456ComSec ghijk 789012NAB 6578hkjf87 -82roieTrade ;lq3i33 oppof8Westpac offewupoi 3287jHotmail iuywhvkj 9387Ozemail klewkk 098j98Qantas fefewif 997ug4Wall Street Journal ioewf 237809GolfWeb iufulvjvj 08070F2 jiogkjv 8787r0Financial Times lkjeslkjg 98732070Individual Inc iohefhff 8747r709etcetcetc
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Commonwealth Bank Example
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Commonwealth Bank Example
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Aggregation Issues
• Trust
• Banking Terms & Conditions
• Customer Consent/Authority Process
• Privacy & Security
• Fraud Mitigation
• Liability
• Advice
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Summary• eCommerce and eBusiness are significant business tools
– not strategies in themselves• Successful businesses need to integrate these tools as part
of their overall business strategy• Leading incumbent players have significant advantages and
opportunities– Customer base
– Brand
– Multi channel distribution
• Customer Service & Trust will be critical for future success• Commonwealth Group has and will continue to be trusted and
successful in applying eCommerce tools to its business strategy, benefiting
– Customers
– Employees; and
– Shareholders
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