ric battellino : inquiry into competition in the banking and non - banking sectors opening comments by mr ric battelino, deputy governor of the reserve bank of australia, to the house of representatives standing committee on economics, sydney, 14 august 2008. * * * mr thomson, other members of the committee, thank you for the opportunity to appear here today. we have provided a written submission to the committee which looks at various aspects of competition in the financial sector. i won ’ t take up the committee ’ s time by going through that submission in detail, but it might be worth highlighting some of the key points and the conclusion. one way to analyse the competitiveness of the financial sector is to look for any signs that we would expect to see if the sector was not competitive. for example : 1. if the overall provision of financing to the economy was inadequate ; 2. or if the costs paid by households and businesses for financial services was high by international standards ; 3. or if the availability of new financial products in australia was less than overseas ; 4. or if the profitability of financial intermediaries was unreasonably high. when we look at the evidence in these key areas, we think it is quite reassuring : • financial intermediation in australia has been growing at a fast rate – on average about twice as fast as the growth of nominal gdp. this is among the highest in the developed world. there is no suggestion therefore that the australian financial sector has been unable to provide adequate access to finance for households and businesses. • in the case of interest spreads charged by intermediaries, we find that they have declined substantially over the past 15 years, and as far as we can tell are in line with international norms. • in the case of financial innovation, we have seen a marked increase in the availability of financial products over the past 15 years, and the range of products compares favourably with the experience overseas. • when we look at bank profitability, we find that australian banks are around the top of the international range. on the surface, this could indicate a lesser degree of competition than elsewhere. but when we look a bit deeper it seems that an important reason for the high profitability of australian banks is their unusually low bad debt experience. over the past decade or so, bad debts of australian banks have been about half the long run average, and also around half the experience of overseas banks. this has been the result of the very strong domestic economy.

make real - time, 24 / 7 payments with richer data and simple addressing using payids. after the npp was launched, it got off to a slow start, but it is now hitting its stride. monthly transaction values and volumes have both tripled over the past year ( graph 1 ). in november, the platform processed an average of 1. 1 million payments each day, worth about $ 1. 1 billion. the rate of take - up of fast retail payments in australia is a little quicker than that in most other countries that have also introduced fast payments ( graph 2 ). graph 1 https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 12 - 10. html 2 / 12 10 / 12 / 2019 a payments system for the digital economy | speeches | rba graph 2 i expect that we will see a further pickup in usage once the cba has delivered on core npp functionality for all its customers. the slow implementation has been disappointing and we expect the required functionality to be available soon. there are now 86 entities connected to the npp, including 74 that are indirectly connected via a direct npp participant. there are at least six non - adi fintechs that are using the npp's capabilities to innovate and provide new services to customers. all up, approximately 66 million australian bank accounts are now able to make and receive npp payments. use of the payid service has also been growing, with around 3. 8 million payids having been registered to date. if you have not already got a payid, i encourage you to get one. i also encourage you to ask for other people's payids when making payments, as an alternative to asking for their bsb and account number. it is much easier and faster. one specific example of where the npp is bringing direct benefits to people is its use by the australian government, supported by the banking arm of the rba, to make emergency payments. during the current bushfires, the government has been able to use the npp to make immediate payments to people at a time when they are most in need, whether that be on the weekend or after their bank has shut for the night. https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 12 - 10. html 3 / 12 10 / 12 / 2019 a payments system for the digital economy | speeches | rb