The Australian government introduced a stimulus programme to try and help offset the negative effects of the measures implemented to contain the spread of the COVID-19 pandemic on consumers and businesses in the country. However, as the positive effects of the stimulus began to wear off in the autumn, this was exposing the economy to further belt-tightening among consumers.
In an official Australian Banking Association (ABA) statement, CEO Anna Bligh said, “Banks stand ready to support customers and if anyone is in need of assistance, they shouldn’t wait but come forward as soon as possible.” ABA members and other players are communicating these financial assistance packages independently, with many announcing changed circumstances for personal and business financial products.
The first phase of open banking officially started from 1 July 2020 in Australia. Open banking will allow consumers greater control of data that financial institutions currently hold, enabling customers to make better decisions.
Millennials and Gen Zers are driving the strong growth for buy-now-pay-later platforms. Buy now pay later adds the “now” to the credit card’s “pay later” mantra and eliminates much of the friction associated with a purchase.
However, increased regulation could slow the burgeoning buy-now-pay-later platforms that are emerging in Australia. Splitit has been recording strong growth after it entered into a deal with Mastercard allowing its users to split payments, something that it also offers for Visa.
Investors need to be aware of the potential for slower discretionary retail spending as the economy struggles its way out of the pandemic and the economic impact of the measures taken to contain its spread. Many analysts have flagged the potential for rising bad debts across the industry as the COVID-19 stimulus is withdrawn from September.
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