Anz Group Holdings Limited · ASX:ANZ
Anz — Investor Presentation (November 2004)
51 slides from Anz's investor presentation, November 2004
Slide 1: Summary Presentation: Research on Financial Exclusion in Australia
Summary Presentation: Research on Financial Exclusion in Australia November 2004 1 CHANT LINK & ASSOCIATES PRESENTATION
Slide 2: Contents
Contents ] Introduction & research objectives 3 ] Literature review findings 5 ] Stakeholder views 17 ] Some past quantitative survey findings 37 ] Next steps – further research 49 2 CHANT LINK & ASSOCIATES PRESENTATION
Slide 3: Objectives
Objectives ] Overall Program: ? Identify the size and nature of financial exclusion in Australia. ? Understand drivers of exclusion, particularly of credit related financial exclusion. ? Determine the level of need for microfinance initiatives & identify the groups in the community to whom these sho
Slide 4: Methodology
Methodology ] Review of Literature: 26 core references and 60 other useful references. ] Stakeholder Interviews: 23 stakeholders in Melbourne, Sydney and Brisbane. ] Analysis of “Finance Monitor” Data: from over 55,000 individuals collected by Roy Morgan Research in the past year. ] Development of a
Slide 5: Findings From Literature Review
Findings From Literature Review 5 CHANT LINK & ASSOCIATES PRESENTATION
Slide 6: Literature Search: Scope
Literature Search: Scope ] Key starting points: Kempson (UK), Connolly & Hajaj (Aust). ] Focused on “financial exclusion” (i.e. not specifically extended to CDF). ] Academic databases: social sciences, marketing, consumer behaviour, finance, etc. ? Starting terms: “financial exclusion”, “social excl
Slide 7: The Context: Social Exclusion
The Context: Social Exclusion ] Origins: “Social exclusion” seen as a concept that is European in origin, part of a “common currency” of social policy research and debate, also prominent in political agendas. ? Being shut out of social, economic, political and cultural systems that determine social
Slide 8: Definitions of Financial Exclusion
Definitions of Financial Exclusion ] Broad definition: Acknowledgment of complex interaction between financial and social exclusion and disadvantage: “Processes that prevent poor and disadvantaged social groups from gaining access to the financial system” (Leyshon & Thrift 1995). ] Narrow definition
Slide 9: Definition of Financial Exclusion
Definition of Financial Exclusion ] Focus of definitions: ? Households: A common focus of definitions (basis for much socioeconomic data). ? Individuals: Also a common focus of much literature. ? Communities: Less common focus for “financial exclusion” literature; more commonly considered in the con
Slide 10: Types or Dimensions of Financial Exclusion
Types or Dimensions of Financial Exclusion ] Two broad themes: ? Geographical / physical exclusion (various types). ? Utility / cost / appropriateness exclusion. ] Kempson classification (UK) widely referred to, including in Australia: ? Access exclusion: restriction through risk assessment. ? Condi
Slide 11: Types or Dimensions of Financial Exclusion
Types or Dimensions of Financial Exclusion ] Economic typology (exclusion curve concept) (UK OFT): ? Income exclusion: Insufficient income acts as a barrier, indicated by a steep rise in the “exclusion curve”. (Example A). ? Price exclusion: Market price is above individual’s willingness to pay, ind
Slide 12: Underlying (Macro) Causes of Financial Exclusion
Underlying (Macro) Causes of Financial Exclusion ] Global trends and policies in mainstream financial services and consumer credit markets noted by almost all authors, such as: ? Increased reliance on “market forces”. ? Growing “user pays” mentality. ? Removal of cross-subsidies. ? Trend to full cos
Slide 13: Individual Associations With Financial Exclusion
Individual Associations With Financial Exclusion ] Low income: Overwhelmingly linked to low income and long-term unemployment or insecure employment. ] Risk factors: Tendency for a similar list of “risk factors” or individual associations to be reproduced in literature, sometimes without empirical e
Slide 14: Consequences of Financial Exclusion
Consequences of Financial Exclusion ] Assumed negative: Widely believed to have negative financial and social consequences, but few data re direct relationship to financial stress and hardship. ] Banking facilities: Costs and security issues in managing cash flow and payments; lack of access to shor
Slide 15: Measurement, Empirical Evidence, Trends
Measurement, Empirical Evidence, Trends ] Measuring financial exclusion: No clear universal agreement about product-based criteria “diagnostic” of financial exclusion. ? Lack of a basic “transaction” bank account was a key focus in UK and US literature, but not felt to be a meaningful measure in Aus
Slide 16: Australian Perspectives
Australian Perspectives ] No definition or diagnostics: No evidence in the literature of a widely accepted definition or “diagnostic” of financial exclusion in the Australian context; less consistent “thread” of financial exclusion literature. ] Similarities with overseas literature: Similar themes
Slide 17: Stakeholder Views
Stakeholder Views 17 CHANT LINK & ASSOCIATES PRESENTATION
Slide 18: Stakeholder Sample
Stakeholder Sample ] Interviews: 23 stakeholders (in 20 interviews) in Melbourne, Sydney and Brisbane, including: ? Australian Consumers’ Association (2) ? Australian Securities & Investments Commission (4) ? Banking and Financial Services Ombudsman (3) ? Insurance Brokers Disputes Limited (1) ? Aca
Slide 19: Importance of Defining Financial Exclusion
Importance of Defining Financial Exclusion ] Financial exclusion is a key area requiring study and attention: ? Large & growing number of affected consumers. ? Negative effects & outcomes of financial exclusion. ? The increasing complexity of the financial system seen as creating higher barriers to
Slide 20: An Australian Definition
…....An Australian Definition Financial exclusion is a lack of access by certain consumers to appropriate low cost, fair and safe financial products and services from mainstream providers. FURTHER: Financial exclusion becomes of more concern in the community when it applies to lower income consumers
Slide 21: Gradations of Financial Exclusion
Gradations of Financial Exclusion Financially included Included, but use harmful products Limited access Core ] Consumers can be drawn deeper into exclusion. ] Many observers confuse these levels. 21 CHANT LINK & ASSOCIATES PRESENTATION
Slide 22: Types of Financial Exclusion
Types of Financial Exclusion ] Stakeholders spoke about the types of financial exclusion in various ways: ? By its main drivers. ? By the main segments affected by it. ? By the various products most often “denied” or otherwise inaccessible to people. This was the most useful typology for this exerci
Slide 23: Types of Financial Exclusion
Types of Financial Exclusion ] Transaction accounts: ? Some consumers in Australia still lack an account. (eg. Can’t establish 100 points of ID, inability to find the right no/low cost account.) Centrelink unofficially provides alternative payment methods for them. ? Unaffordability/can’t use. (eg.
Slide 24: Types of Financial Exclusion
Types of Financial Exclusion ] Financial counselling: ? Typical agencies are facing increasing demand. ? Many consumers do not seek/receive financial counselling at all, even when needed. ? Consumers using such services like the polite and considered treatment they receive there. ] Investment advice
Slide 25: Exclusion from Appropriate Credit
Exclusion from Appropriate Credit 1. Major credit card exclusion: (no credit card, cannot pay some bills) ] Low income and constrained credit history often meant denial of a credit card. ] Belief that one third of credit reference agency records contain errors. 2. Credit card inclusion & abuse: ] Ab
Slide 26: More Types of Financial Exclusion
More Types of Financial Exclusion ] Insurance exclusion: Seen as increasingly unaffordable for many. Where low premiums are offered, high excesses still place low income consumers at significant risk. ? Home & contents: § Widespread exclusion & under-insurance (property & especially contents). § Bel
Slide 27: Temporary/Permanent Exclusion
Temporary/Permanent Exclusion ] Temporary (acute) financial exclusion: occurs when a state of low income is temporary: ? Illness. ? Family break-up/recently separated women with young children. ? Temporary visa holders. ? Recent low income immigrants. ] Permanent (chronic) financial exclusion: occur
Slide 28: Who Are Financially Excluded?
Who Are Financially Excluded? ] Segments were known to exhibit higher than average financial exclusion: ? Indigenous people. ? Certain other ethnic groups. ? Disabled people. ? Those in poverty/on low incomes. ? Those on social security benefits. ? Sole parents, especially single mothers if not work
Slide 29: Who Are Financially Excluded?
Who Are Financially Excluded? Exclusion Unemployed Working poor Mid income Double Affluent Type income 1st quintile 2nd quintile 3rd quintile 4th quintile 5th quintile Transaction a/c Savings a/c Fin counselling Investing advice Superannuation Affordable loan Insurance Major credit card Home equity
Slide 30: Main Drivers of Financial Exclusion
Main Drivers of Financial Exclusion In declining order of importance: ] Low income and the consequent problems of: ? Nil or low savings that would insulate a low income household from financial shocks ? Lack of assets and of security for acquiring a normal (low cost) loan. ] Unemployment, discontinu
Slide 31: Other Drivers of Financial Exclusion
Other Drivers of Financial Exclusion ] Less frequently mentioned, but also seen as important drivers were the following, although some/most were seen as consequences of/associated with the main drivers mentioned above: ? Psychological, and disability related issues. ? Feeling of being excluded. ] Ot
Slide 32: Poverty/Low Income: Cause or Effect?
Poverty/Low Income: Cause or Effect? Lack of appropriate credit Poverty Financial Exclusion Lack of basic banking Lack of financial advice ] Lack of “good” credit may often be a cause of poverty/delay move out of financial hardship. ] Lack of basic banking or financial advice may often be the result
Slide 33: Main Impacts of Financial Exclusion
Main Impacts of Financial Exclusion ] Economic impacts: ? Individual and household level: lowers standard of living, delays process of rising above hardship & social exclusion. ? Community level: failure to foster community enterprises in Australia may have significant economic effects there. ? Main
Slide 34: Other Impacts of Financial Exclusion
Other Impacts of Financial Exclusion ] Use of Community Based Financial Services: ? Major NFP initiatives: § NILS loans and Step Up loans. § SaverPlus savings incentives. ? Informal grassroots programs (eg savings schemes at sporting and social clubs). ] Reactions to such schemes: ? Seen as very ben
Slide 35: A Model of Financial Exclusion
A Model of Financial Exclusion Do without Social/wider exclusion High cost alternatives Inefficient use of Poor social, economic & health outcomes Financial money exclusion Low standard of living & poverty Delayed pathway out of poverty Low/no assets Debt (often informal) Mainstream product attribut
Slide 36: Most Needed Services
Most Needed Services ] Number of “high importance” and “medium importance: mentions from 20 interviews: Small personal loans 3 16 Financial counselling 0 13 Fairer/safer credit card 4 10 Savings incentive a/c 5 9 Basic transaction a/c 1 7 Moderate importance Investment advice 2 4 High importance Com
Slide 37: Findings From Analysis of Financial Monitor Data
Findings From Analysis of “Financial Monitor” Data 37 CHANT LINK & ASSOCIATES PRESENTATION
Slide 38: Main Findings
Main Findings ] Total “exclusion”: Only 0.8% of the Australian adult population (and 0.7% of decision makers in the home) owned no financial products (compared with 7% in the UK). ] Minimum access: 6% owned only a transaction product. ] Median number of products: ? The median number of financial pro
Slide 39: Main Findings
Main Findings ? By income (personal): A large effect: 3 products at annual income of $10,000, to 8 products at annual incomes exceeding $100,000. ? By employment status: A large effect. eg Only 2.5% of employed people had no products versus 18% of unemployed people. ? By remoteness: There were no ap
Slide 40: Specific Product Ownership/Exclusion
Specific Product Ownership/Exclusion ] Income: There were some major effects on specific product ownership with variations in income. ] Level of savings and investments: Also had a major effect, especially at the low end of savings & investments (under $10,000). ] Home ownership (or buying) versus r
Slide 41: Exclusion Curves – Txn/Savings
Exclusion Curves – Txn/Savings All adults n=51,830 100 Txn a/c % Non- ownership Deposit a/c 75 Super/rollover Managed fds Direct invest 50 25 0 <6 15 25 35 45 60 80 100 120 >130 Personal Income $'000 pa 41 CHANT LINK & ASSOCIATES PRESENTATION
Slide 42: Exclusion Curves – Credit/Loans
Exclusion Curves – Credit/Loans All adults n=51,830 100 % Non- ownership 75 50 Store/finance card Credit card 25 Home loan Personal loan 0 <6 15 25 35 45 60 80 100 120 >130 Personal Income $'000 pa 42 CHANT LINK & ASSOCIATES PRESENTATION
Slide 43: Exclusion Curves – Insurance
Exclusion Curves – Insurance All adults n=51,830 100 % Non- ownership 75 50 Priv health ins. 25 Life insurance Contents ins. Building ins. Other ins. 0 <6 15 25 35 45 60 80 100 120 >130 Personal Income $'000 pa 43 CHANT LINK & ASSOCIATES PRESENTATION
Slide 44: Level of Savings & Investments
Level of Savings & Investments All adults n=51,830 40 36.1 % of Sample 30 Under $10,000 in savings/investments: one third of adults 20 10.4 10 6.8 8.0 8.0 6.6 4.0 4.4 4.1 4.2 4.3 3.1 0 ro K+ 9 99 ,00 999 0K 9.9K 9 9K 99 $5 9.9K -$9 K Ze K ,99 -$4 50 9.9 49 1,9 $9 -$ $1 $4 $ $1 $1 $4 $1 00 00 0-$ to
Slide 45: Effects of Level of Savings & Investments
Effects of Level of Savings & Investments All adults n=51,830 Txn account Deposit acct Super'/rollover Man'd investment Direct investments % Non- ownership 100 99 99 97 99 99 98 97 97 92 92 95 92 87 88 88 84 83 80 80 78 75 70 69 60 60 55 45 40 37 30 29 20 13 6 5 6 7 7 7 0 Zero $1-$99 $100-$499 $500-
Slide 46: Effects of Level of Savings & Investments
Effects of Level of Savings & Investments All adults n=51,830 Store/finance card Major 5 credit card Home loan Other loan % Non- ownership 100 94 93 92 93 92 92 91 90 89 85 86 85 85 80 79 81 80 82 79 81 80 70 73 70 60 62 61 54 46 40 41 20 0 Zero $1-$99 $100-$499 $500-$999 $1,000 - $2,000 - $5,000- s
Slide 47: Effects of Level of Savings & Investments
Effects of Level of Savings & Investments All adults n=51,830 Private health ins. Life ins. Contents ins. Building ins. Other ins. (excl TPP) % Non- ownership 100 94 93 92 89 90 90 88 82 85 84 80 78 81 76 74 72 71 67 65 65 60 63 61 60 61 59 58 58 57 52 51 46 46 45 40 40 34 20 0 Zero $1-$99 $100-$499
Slide 48: Effects of Home Ownership & Savings Level
Effects of Home Ownership & Savings Level Decision makers n=48,396 % Non- ownership Contents insurance (own home) 100 Contents insurance (not own home) Building insurance (own home) 80 80 72 67 64 60 47 40 28 20 19 18 19 14 14 10 10 10 7 0 <$2,000 $2K to $4.9K $5K to $9.9K $10K+ Can't say 48 CHANT L
Slide 49: Next Steps - Primary Research on Financial Exclusion
Next Steps - Primary Research on Financial Exclusion 49 CHANT LINK & ASSOCIATES PRESENTATION
Slide 50: Next Research Steps
Next Research Steps ] Next phase: will focus on informing the development of some new ANZ programs: ? A small loans program for people on low-incomes who may otherwise use payday lenders and other fringe credit providers. ? A microfinance program to facilitate the development of Indigenous businesse
Slide 51: Chant Link & Associates contact details
Peter Link Stuart Vawser Stephen Downes Graham Chant Chant Link & Associates 610 Glenferrie Road Hawthorn Victoria Australia 3122 Telephone: (61-3) 9819 5244 Fax: (61-3) 9819 6270 Email info@chantlink.com 51 CHANT LINK & ASSOCIATES PRESENTATION