What’s been happening in the world of business over the last month or so?
To save you from endless scrolling, we’ve filtered out some of the most prominent business news stories in Australia.
CBA loses market share – are we going to see lending competition heat up?
Largely due to home loan customers (both owner-occupied and investment property lenders) deserting the bank in favour of refinancing with other banks or financial institutions, The CBA has lost market share for the first time in five years.
This has been to the benefit of the other big 3 Australian banks – ANZ, Westpac and NAB, who have scooped up CBA’s lost customers. But what does this mean for the market?
For starters, it could mean that CBA will become more competitive.
“This is not normal to see their home loan book go backwards rather than forwards,” said RateCity’s director of research Sally Tindall. “If Australians continue to refinance in droves, they continue to switch away from Australia’s biggest bank, they will be forced back to that negotiating table.”
Although The CBA may not react immediately, many analysts agree that they will take measures not to lose any more market share.
“While CBA is likely to have some patience, history shows this is not unlimited and if its market share continues to contract, we expect it to react with price,” explained Barrenjoey’s Jonathan Mott.
Indeed, as borrowers increasingly vote with their wallets, we may see prices being lowered and a more competitive market on the horizon, (which of course, will also potentially benefit business owners with their own premises, those operating from home, and businesses with loans.)
With increased competition, there may also be potential for better deals and favourable refinancing options.
The RBA holds rate rise but warns of increasing pressure on a broader scope of the population
While many property owners may have sighed in relief at the RBA’s October decision not to raise interest rates, there’s an increasing cohort of Australians feeling the pinch – and more to come.
Over the next few weeks and months, around 550,000 Australian homeowners will roll off fixed rate loans onto more expensive variable loans. And with this movement, we can expect an increase in financial pressure that will affect middle and upper income families and individuals.
What’s new about the scenario is the number of employed people at the upper end of the earning scale experiencing financial stress.
According to a Freedom of Information request, the RBA says its data indicates that more people are using credit cards to deal with the rising costs of living. The RBA also revealed that there’s been a recent increase in people calling the National Debt Helpline, with an unusually high occurrence among those in the upper-income cohort.
An internal RBA email in July said the helpline agency “reported a significant number of callers experiencing hardship who are accruing additional debts via credit cards, Buy Now Pay Later, borrowing from friends and family, and increasingly unpaid obligations to the ATO, their utilities providers and council rates”.
The internal email also noted that many callers were gainfully employed and that “examples were given of mortgagees on six-figure salaries residing in prosperous suburbs of Sydney”.
It was revealed by meeting minutes that the RBA had considered raising rates in their October 2023 meeting but decided against it, however, broad financial pressure will likely increase again as the RBA may eventually raise rates before the end of the year.
Currently the RBA is working on the assumption that inflation levels will not return to their 2-3% target until late 2025.
For small businesses, this may mean that the pressure will trickle down to their profits. If people with decent means are resorting to using credit cards for bills and fuel, we may see a dip in consumer confidence and less cash flow for many small businesses.
Fuel prices surge on the back of the Israel and Hamas conflict
On Monday 9 October the price of crude oil surged 4-5% in response to increased turmoil in the Middle East.
“Israel does not produce much oil so the main risk from the Israel conflict is if Iran gets involved,” says AMP chief economist Shane Oliver.
Dr. Oliver also predicts that oil prices will continue to increase, especially as the war ramps up, which seems likely at this stage.
For Australian motorists this means an increase in the price of petrol – despite the fact prices were dropping in the weeks leading up to the conflict.
“Oil prices fell last week and that would normally have led to about a 10c/litre fall in petrol prices but the conflict in Israel has reversed that partly and added a bit of upside risk to around $2.25/litre,” commented Dr. Oliver.
The surge, of course, will add additional pressure to already stretched household budgets. And, for any small businesses that rely on vehicles to operate, the current and potential price increases will undoubtedly hit hard.
Atlassian co-founders buy ‘Loom’ for $1.5 Billion
The Australian founders of tech giant Atlassian have made a significant purchase – they’ve snapped up Video messaging platform, Loom, for AUD $1.5 Billion.
So, what’s Loom?
Started up in 2016 by Joe Thomas and Vinay Hiremath, Loom enables users to simultaneously record their desktop screen, camera, and microphone. The technology also includes AI-powered video editing functionality to generate titles, summaries, chapters and more.
The reason behind the deal is the opportunity of integration with Atlassian’s existing products like Jira. Loom’s features can be seamlessly integrated into Atlassian’s platform, enabling users to transition between video, transcripts, summaries, documents, and other workflows.
As co-founder Joe Thomas commented on the Loom deal,
“Loom’s vision is to empower everyone at work to communicate more effectively wherever they are, and by joining Atlassian, we can accelerate their mission to unleash the potential of every team … we’re excited to weave video into collaboration in a way that only Loom and Atlassian can.”
For those entrepreneurs using Atlassian products to run their businesses, you’ll soon be seeing a more advanced and useful product that should streamline workflows and increase capability.