How Banking in Australia Came to Be
The Australian banking industry has grown significantly since its infancy in the early 19th century. The Bank of New South Wales, Australia's first bank, founded in 1817, went on to become Westpac Banking Corporation, one of the top financial institutions in Australia today. Over the years, the banking sector expanded at a great pace to fund the booming economy, commerce, and population.
Government Intervention and the Great Depression
In the late 19th and early 20th centuries, the banking industry went through times of volatility, particularly in times of financial crises and economic recessions. The Great Depression of the 1930s led to increased government intervention in banking regulations in an effort to make the financial system more resilient and avoid bank failures.
The Commonwealth Bank of Australia, founded in 1911, was a turning point in the financial history of Australia. It was initially set up as a government bank. The Commonwealth Bank played a crucial role in economic development, war financing, and national saving. It was converted into a commercial bank and fully privatised in the 1990s.
The Birth of the Reserve Bank of Australia
The Reserve Bank of Australia (RBA) was established in 1960 as an independent central bank responsible for managing monetary policy, interest rates, taxes, and the stability of the financial system. Its creation allowed for a more structured and independent approach to monetary regulation, separate from government-owned banks.
Deregulation and Global Integration
The banking industry kept changing throughout the deregulation era of the 1980s when it unleashed more competition, swept in financial innovation and welcomed foreign banks. Process pointed out deregulation allowed the removal of barriers against interest rates, exchange rates and finance, which would result in a far more vibrant system and also a competitive financing program. This was when the EFTPOS and the digital bank were also born, allowing Australians to access their funds in new ways.
Banking in the 21st Century
The Australian banking industry is one of the safest and most effective industries in today's world market. The Big Four is among the safest and largest banks globally. As the industry matures to consumer and business-changing needs and a robust regulation framework, there is an increase in digital banking, mobile payments and financial technologies.
The Role of the Big Four Banks
Australia's financial sector is dominated by the big four banks—ANZ, Commonwealth Bank, NAB and Westpac. They all offer a complete range of services, including business and personal banking, home loans, and investment management. They all have operations outside of Australia, with overseas arms used to help promote worldly investment and trade.
Financial Regulation and Consumer Protection
Australian banking is a heavily regulated sector, primarily because this regulation is aimed at protecting consumers and ensuring the stability of the financial system. Furthermore, it is a requirement of the Australian Prudential Regulation Authority (APRA) that banks and financial institutions need to manage their risk efficiently. The Australian Securities and Investments Commission (ASIC) is responsible for the consumer protection laws which are used to prevent financial misconduct.
Moreover, the Financial Claims Scheme guarantees the proportion of money per account holder that is deposited in the bank in the event of a bank default, therefore providing additional security to the depositors.
Conclusion
Point of banking in Australia began as a very basic service that has become a sophisticated and well-regulated industry. One of the keys to being a leader in global banking for Australian banks is the strong regulatory framework that they operate under and the advancement of financial technology in the region.
