Charismatic

Does it still make sense for them to be...together?

KiwiBank has blossomed while the postal service has struggled, the bank is subsiding the postal service and it's been going on for a while now. If KiwiBank is eventually to be floated or sold it's not going to make a lot of sense to attach it to a postal business as a liability. KiwiBank could continue to pay NZ Post for use of their stores but even there KiwiBank have started to go it alone with stand alone stores and specialist banking staff.

LoCarb

Kiwi Bank was created as a coalition deal between Labour and Jim Anderton's Alliance Party.
The left leaning Alliance were reacting against the Oz banks having carte blanche in NZ.

It would be a brave move by National to sell, as most Kiwi's support have at least one national bank NZ owned. I know Key would love to, but a pretty risky move politically.

jmh

A key reason why I am with Kiwibank is that it is NZ owned etc. In fact, I'm not paying higher fees for that choice and don't feel I am compromising on service.

My local branch has just set up one cashier space just for us so we don't have to queue with the postie people, but the person still does postie stuff if there is no one in his/her queue. Seems a more efficient way of doing it than having separate premises.

Charismatic

Their mortgage rates are very competitive at the moment, they've recently restructured to reduce cost and obviously passed that saving along with OCR moves directly on to customers.

Bloomberg recently said that only 2 of 17 economist picked an OCR rate cut yesterday and one of the outliers was KiwiBank so well done there .

Interestingly consumer credit is now growing at only 3.3% which is sharply down and now less than half the pace of Agri (8.6%), Business (7.5%) or Housing (7.8%). Most people expect Agri to grow at a slower pace as farmers look to consolidate operations and reduce debt if the milk price/payout stays at current lows. Because Kiwibank have avoided getting into Agri lending they also fair a lower chance of wearing impairments which will also given them an advantage.

chocolate cake

I've switched banks 3 times in the 8 years I've been here, but discounted the Kiwi Bank only for the shared offices with postal service, and the inevitable queues.

Though I guess it's probably not too much of an inconvenience given how infrequently you need to visit the bank these days.
While I've been reasonably pleased with the one I've been with the last couple of years Westpac (certainly compared to the other two) the fact that none of the big have passed on the full drop in the OCR recently is disappointing, but hardily surprising.

Charismatic

Interesting opinion article today on interest.co.nz about this topic.

jmh

That reminds me. I've had to go to several bank branches recently for my father who has dementia. Westpac, ASB and BNZ to be exact. In every single case, while the branches didn't appear that busy we were kept waiting a long time. I think most quick transactions people do are over the internet now, so the people visiting branches are the ones with more complex requirements. Usually the only reason I go to Kiwibanki/Post Office is to buy stamps, not use the bank.

Bo-Jangles

The reason it takes so long to get out is because they're all too bloomin nosey and trying to upsell you something you didn't know you needed. It's worse than McDonalds - 'Do you want life insurance with that?'

Charismatic

High margin products.

There hasn't been much innovation within banks to create truly new products or services so traditional business lines have become very low margin. Traditional banks have missed out on transaction services like PayPal, Alipay, Apple Pay etc. and most fintech innovation is coming from new entries to the market place.

jmh

I got chatting to one of the people serving me and it sounds like bank staff are very unhappy. No pay rises, higher targets and more stress. I agree, it's probably not much better than working at MacDonalds - nicer uniform perhaps.

Charismatic

Was reading that story about insurance company Youi being a bunch of cowboys today and recalled something I once read:
"People with targets and jobs dependent upon meeting them will probably meet the targets - even if they have to destroy the enterprise to do it." - W. Edwards Deming.

Some banks have just learned nothing about putting people and ethics first. If it's just a bunch of talentless managers and executives squeezing a lemon ever harder to extract some some marginal gain in efficiency that company will be in trouble in the long term.

jmh

Interesting quote. I had a client who was a 'business manager' (i.e. he flogged off loans) at one of the big banks. He had worked there for a while, always met his targets, and had a strong client base. He was leaving because every year they put up his targets and he knew that soon he would fail to meet them. The guy was really talented and a genuinely decent bloke, who was being hounded out of his job because of targets. The stress was getting to him as well. Clear bad management.

I interview people all the time for my business and it's clear to me that people do really well without the need for targets if they work for the right company.

Charismatic

Ownership transferred between govt. departments at well under market value it seems to me. So pensioners and people on dissabilities win but people who use NZ Post or their Courier service will pay more. This split makes it unlikely KiwiBank will ever IPO because the arrangements get too complex for investors to value.

LoCarb

My first reaction: this is all about NZ Post being prepared for privatisation.
Money in NZ Post kitty to make it more attractive.

Charismatic

There was a story recently suggesting they are now trailing the market on some rates measures, it's likely they have grown as far as they can without more capital so are sitting on margin and safety instead. However by the admission of the banks executives they need IT investment and to improved risk & compliance management to grow further.

The more I look at the deal the more you realise what a bargain it is for the buyers, New Zealand Post must be desperate for the money (they are trimming staff at quite a rate, 500 last month).