SLIDE 1 Commonwealth Bank of Australia Premium Financial Services
John Beggs, Executive General Manager 29 May 2002
www.commbank.com.au
SLIDE 2 The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentations, 29 May 2002. 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
without professional advice when deciding if an investment is appropriate.
Disclaimer
SLIDE 3
Agenda
The Opportunity Business Model Execution Differentiators Questions
SLIDE 4
The Opportunity
SLIDE 5 Distribution of Wealth in Australia*
Source: National Centre for Social & Economic Modelling * Wealth excludes the family home
0% 20% 40% 60% 80% 100% Number Wealth Top 1% Next 4% Next 5% 90%
SLIDE 6 Asset Holdings by Wealthy Households
Source: Boston Consulting Group & CBA Research
0% 20% 40% 60% 80% 100% Nth America Europe Australia Asia-Pac Latin Am
Deposits/cash management Securities Managed funds Private business Non-residential real estate
SLIDE 7 CBA Customer Demographic
Source: Merrill Lynch
NAB WBC ANZ CBA
Cross Sell Customer demographic Loss making Hidden premium
SLIDE 8
PFS Business Model
SLIDE 9 The PFS Experience
Premium Products Premium Service Premium “Prices” Premium Clients
People Advice Technology Presence
SLIDE 10 Advice
The Efficient Frontier
A - Client’s natural position due to lack of information and access to wealth creation strategies B - Optimum position for long run wealth creation Value add by PFS in wealth accumulation phase Value add by PFS in security of income & wealth preservation phase
Risk Expected Return
B A
SLIDE 11
Client Servicing Model
Implement a client servicing model which is scalable and
institutionalises the relationship
Segment the PFS client base into three: Private Client Services Premium Banking & Investment Services Premium Direct Services Provide different levels of service and products across
the premium segment
SLIDE 12 Client Definition
PFS clients will be affluent, in terms of wealth
- r income, and will include individuals and owner
managed or operated businesses, including professional partnerships. As with all premium services a significant number
- f people will choose the premium package
notwithstanding they do not fit the criteria of affluent.
SLIDE 13 Premium Service
“Surprise” and “delight” our clients Build packaged products, exclusive to PFS Implement a team based servicing model with a mixture
Improve service
SLIDE 14
Execution
SLIDE 15
The Base for PFS
Premium Banking from the Retail Bank Equities, including CommSec & Executive Banking,
from Institutional Banking
Clients from the Retail Bank Selected owner operated or owner managed
business clients
SLIDE 16
The Starting Point
At 30 April 2002
830 staff 24 locations across Australia 40,000 relationships Over 725,000 CommSec accounts
SLIDE 17
The Next Phase
“Cherry pick” from CBA client base
70,000 relationships in July 2002 250,000 relationships in 2004
SLIDE 18 Structure Chart
HEAD OF PFS Michael Katz Premium Direct Services Michael Amyotte Product Management & Engineering John Beggs Operations & Risk Art Brown Human Resources Phyllis Sequeira Finance David Lawler Premium Banking & Investment Services Paul Rickard Private Client Services Scott Riedel
CLIENT SERVICING SUPPORT PRODUCT & TECHNOLOGY
SLIDE 19 Regulatory Segmentation
Private Client Services
Clients will generally meet the Corporations Act requirements for a “Sophisticated Investor” *
Premium Banking & Investment Services
Clients will generally seek “Personalised Advice” * and will need to supply “Know Your Client” * data
Premium Direct Services
Clients will not receive advice, only information
* As defined in Corporations Act and/or Financial Services Reform Act
SLIDE 20 Client Migration Across Divisions
RBS PFS IBS
Clients migrate to PFS as they become affluent Businesses migrate to IBS if no longer owner managed/operated Clients migrate to RBS by choice Selected owner managed/
SLIDE 21
Team Based Servicing Model
Personal Banker Commercial Banker Investment/ Equities Expert Event Based Advisor Insurance Expert Client
Primary RM Secondary RM & specialised advice
SLIDE 22
Team Member Accountabilities
Primary RM for a portfolio of clients Secondary RM for the clients of other team members Provide specialist advice on their area of expertise to
the entire team’s portfolio
SLIDE 23
Development of Front Line Team
Challenge is to develop a team with sufficient scale
and expertise
Can not afford to buy ready made teams A new culture is required Investigating alternative recruitment models
SLIDE 24 Packaged Premium Products
RBS or IBS will manufacture the core banking products
which PFS will purchase
PFS will build a Premium Package using the core
banking product as building blocks
PFS will be the sole distributor of the Premium Package Where CBA does not compete, PFS will use alliances
SLIDE 25
Rapid Development of Premium Service Experience
Establish a dedicated team of operational and risk
management specialists to solve ongoing transactional issues
Apply engineering and systems skills to streamline
processes which were built to service the scale of the Retail Bank
Leverage off the CommSec internet platform
SLIDE 26
What PFS Will Not Do
PFS will not:
Re-build basic products Provide tax advice Compete with accountants
SLIDE 27
Differentiators
SLIDE 28
Differentiators
An existing scale client base means low PFS client
acquisition costs
Full service model (assets and liabilities) Team based relationship management CommSec and other Equities business within PFS PFS is separate from RBS and IBS Business & personal needs serviced by the same
relationship manager
Credit products will differentiate from IFAs
SLIDE 29
PFS
The Premium Financial Experience
SLIDE 30 Commonwealth Bank of Australia Premium Financial Services
John Beggs, Executive General Manager 29 May 2002
www.commbank.com.au
