i n s t i t u t i o n a l b a n k i n g

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New HorizonsManaging Growth

Stephen CoulterGeneral Manager Global eCommerce

Commonwealth Bank of AustraliaJune 19, 2001

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The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 19 June 2001. 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 or without professional advice when deciding if an investment is appropriate.

Disclaimer

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Group StrategyBusiness Goals

To be To be the best the best brands in brands in helping helping customers customers manage and manage and build wealthbuild wealth

Develop offshoreDevelop offshoreopportunitiesopportunities

Global best-practice costsGlobal best-practice costs

Best TeamBest Team

Attract more customers Attract more customers & more revenue per customer& more revenue per customer

Best value service through Best value service through innovation & on-line leadershipinnovation & on-line leadership

Strategic Vision Financial GoalTop

QuartileTSR

Growth with lowGrowth with low inflationinflation

Major technologyMajor technologyshiftshift

WHY?

Pace of changePace of change

Limited longerLimited longerterm domestic term domestic scopescope

Margin squeezeMargin squeeze

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Index of Top Consistent Performers100.0

99.398.7

97.0 96.8 96.695.9 95.6 95.5 95.4 95.3 95.3 95.2 94.9 94.6 94.4 94.3

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Source : Oliver, Wyman & Company Report Number 3 Volume 11 March 2001

SPI t

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2000

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Flashback Analysts Presentation – May 27, 1999

Banking is now part of the Banking is now part of the information industryinformation industry

Banking andFinancial Services

Tele-Communications

Technology

Media

Information

Customer NeedsCustomer Needs•• TimeTime•• ConvenienceConvenience•• InformationInformation•• Money ManagementMoney Management•• ValueValue•• TrustTrust

Analyst Presentation, May 27, 1999

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Relationships built around customer needs, brand Relationships built around customer needs, brand and multiand multi--channel accessibility will be channel accessibility will be

Commonwealth’s strengthCommonwealth’s strength

Brand

Customers

Accessibility

Experience


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Strategic PrioritiesStrategic Priorities

1.1. Win the strategic battlesWin the strategic battles–– Relationships, Alliances, PositioningRelationships, Alliances, Positioning

2.2. Implement endImplement end--toto--end model to enable end model to enable cost savings to be cost savings to be realisedrealised

3.3. Harvest the cost savings Harvest the cost savings


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Commonwealth Group Home Page

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Strategic battles around relationships have been successful….

Measure Jun 99 Jun 00 Jun 01 estNetBank 89,400 325,000 900,000Quickline 23,600 36,000 50,000MobileBank - 6,500 17,000Diammond/eCommCorporate 6,100 7,300 8,000ASB/BankDirect 18,000 58,000 100,000Banking 137,100 432,800 1,075,000

ComSec Online 60,000 155,000 225,000

HomePath - 36,000 100,000

Total Online Customers 197,100 623,800 1,400,000

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As have our alliances...

Alliances

Market A

ccess

Technology/Skills Access

Scale E

conomics

Risk Sharing

• Australia Post• Woolworths Ezy Banking• ninemsn

• EDS• Telecom NZ• Vodafone• KeyCorp• CommerceNet• Knowledge Lab• Cyberlynx

• EDS• Telecom NZ• ninemsn• Cyberlynx

• EDS• TelecomNZ• Vodafone• SupplySearch• KeyCorp• Cyberlynx

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Customers are moving transactions and business activities online

• Transactions– December 2000 profit announcememt we advised 84% of

transactions are now electronic versus 16% over the counter– Over 1,800 online merchants– Over $10 billion in payments through NetBank– 80% of Commsec trades occur online– Total transactions of 34 million online in April 2001

• 4m in 98, 8.5m in 99 and 18.5m in 2000

• Sales– Over 4,000 credit and 10,000 deposit account applications per

month online

• Inquiries– Over 17 million service enquiries per month via NetBank

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Commonwealth Group is applying web technologies to its own business

• Finance and Human Resources with PeopleSoft

• IP enablement of all premises– Target of end July for all branches to be cabled

• eProcurement with Cyberlynx• Growing intranet applications and information

– Over 2 million activities per week

• Online Shareholder and Media Centres

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Intranet Development & Usage is Improving

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Shareholder Centre for Investors

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Cyberlynx has been successfully implementedi n

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Looking Forward……….

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Commonwealth’s Online Vision

Retain and attract commercially astute, eCommerce aware people Customer focussed information Network and device independent Anything, Anywhere, Anytime Decision support, Information, Education and Advice Web enable our enterprise

Requirements

“ In chosen markets,to be the leading global provider of online information services

related to financial services in a profitable manner.”

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s There is no “new economy”

• There is one economy• There are old and new ways of doing business• Old truths still prevail

– Customers– Products and Distribution– Returns to owners– Employees – retain and attract– Community – support and earn respect

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The only sustainable competitive advantages will be customer

service and trust

• Products are commoditising

• Price differences will narrow

• Low costs will be a hygiene factor

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Customer Performance Model

CustomerAcquisition

CustomerRetention

CustomerShare of Wallet

CustomerValue

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NetBank customers are valuable

Product Penetration Balance vs Average Customer Online Customers Average Customer

Credit Cards 31% 76% 130%Loans 14% 46% 178%Deposits 81% 98% 100%

• Online Customers also make significant use of the Internet for product origination, enquiries and transactions.

• These are the tip of an online-influenced iceberg– Cross Channel referrals and service are vital– Monitor sales rates by origination point– Monitor quality of business by origination point

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• Better customer service leading to revenue growth• Lower internal delivery cost• Quicker time-to-market• Lower distribution costs

Organisations are now realising the power and value delivered from end-to-end web enablement

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s Trust as a competitive advantage• Identification• Authentication• Security• Privacy• Integrity (Data & Message)• Fairness & Honesty• Experience• Stability

Trust based services will grow……..

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Account AggregationBring My Information Together at One Web Site with

one user name and password.

Site User Name PasswordCommonwealth Bank abcdef 123456ComSec ghijk 789012NAB 6578hkjf87 -82roieTrade ;lq3i33 oppof8Westpac offewupoi 3287jHotmail iuywhvkj 9387Ozemail klewkk 098j98Qantas fefewif 997ug4Wall Street Journal ioewf 237809GolfWeb iufulvjvj 08070F2 jiogkjv 8787r0Financial Times lkjeslkjg 98732070Individual Inc iohefhff 8747r709etcetcetc

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Commonwealth Bank Example

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Aggregation Issues

• Trust

• Banking Terms & Conditions

• Customer Consent/Authority Process

• Privacy & Security

• Fraud Mitigation

• Liability

• Advice

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Summary• eCommerce and eBusiness are significant business tools

– not strategies in themselves• Successful businesses need to integrate these tools as part

of their overall business strategy• Leading incumbent players have significant advantages and

opportunities– Customer base– Brand– Multi channel distribution

• Customer Service & Trust will be critical for future success• Commonwealth Group has and will continue to be trusted and

successful in applying eCommerce tools to its business strategy, benefiting

– Customers– Employees; and – Shareholders

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i n s t i t u t i o n a l b a n k i n g

Documents

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