JOB cuts planned by Westpac are likely to be replicated across the sector as major Australian banks combat the slowing economy and subdued credit growth.
Up to 1000 Westpac jobs, primarily in middle management at the bank’s Sydney headquarters, are expected to go in the next few months as the bank attempts to contain costs.

There was speculation last night that other major banks could make similar moves because of lower credit growth expected over the next year.

The National Australia Bank was said to be contemplating setting up an offshore back-office processing facility, possibly in Manila.

Deutsche Bank analyst James Freeman said Westpac could cut up to 2000 jobs by increasing the outsourcing of information technology projects. The bank cut almost 600 IT jobs in the six months to March.

“(Westpac) management are acutely aware of the need to generate good underlying earnings growth and headcount reductions and offshoring should assist in achieving this,” Mr Freeman said.

“We are confident that there is significant fat within the overall Westpac cost base, and that the group is likely to remain on the cutting edge of the cost curve with respect to peers.”

The talk of job cuts came as a new report from Moody’s said that intense competition in the retail banking market would continue and could ultimately threaten ratings if margins were severely eroded.

The competition has been most intense in mortgage lending, with NAB conducting an aggressive campaign to grab market share from the Commonwealth Bank and Westpac.

Moody’s senior analyst Patrick Winsbury said while the two Sydney-based banks were the most active home lenders during the global crisis, the market dynamics had since changed.

“The NAB has more recently been working to gain residential mortgage market share in Australia where it is underweight, and has in the process sparked a round of price-led competition,” Mr Winsbury said.

“The outlook for credit growth and how the banks respond has the potential to be a key rating consideration for the coming years. If the slower credit growth continues to spur price-lending competition, negative ratings pressure could emerge unless funding costs fall or efficiency improves.

“For the moment, however, we view the banks to have adequate buffers in their profitability to withstand some increased asset-price competition.”

The Moody’s research found the banks were well capitalised in the lead-up to the introduction of the global Basel III regulatory changes.

It said ANZ had changed its funding composition the most, as part of its strategy to push heavily into the Asian regional banking market.

Actual Article

http://www.theaustralian.com.au/business/companies/bank-on-more-job-cuts-after-westpac-swings-the-axe-say-analysts/story-fn91v9q3-1226117023996

Insecure mobile devices concern fraud chiefs.

Fraud experts have called on the finance industry to consider banning connections to online banking services from jailbroken devices, as the sector struggles to handle rising levels of electronic fraud.

While insecure transaction processes contributed significantly to electronic fraud, financial institutions were fearful of insecure mobile platforms.

They were most concerned about users who jailbroke their devices, a process which granted user access to the device’s root directory, allowing them to install applications and trigger settings not vetted by Apple.

Jailbreaking a device can turn on a string of services, such as remote access, not usually available on the mobile. This process made it easy prey for exploitation, particularly if users neglected to change the default root passwords made accessible when jailbroken.

Leanne Vale, a fraud and financial crimes manager with credit union industry body Abacus Australian Mutuals, said the sector would have to tighten control over consumers who accessed bank services from such devices.

“We are going to get to a recalcitrant point where [financial organisations] will say that if you have jailbroken your iPhone, we won’t offer you the service,” she said.

One major Australian bank reported that electronic fraud had doubled in the last nine months.

Fraud is estimated to cost Australians approximately $8.5 billion a year, according to the Australian Institute of Criminology. The divide between businesses and consumers on the figure remains unclear.

Vale said institutions could potentially even move to ban customers repeatedly deemed insecure from accessing services by mobile.

The concept would leave responsibility for client information security with customers themselves; a sea-change from the current situation in which banks soak up fraud costs.

However, Vale and her industry colleagues acknowledged the finance sector had failed to properly educate users.

“We have to rely on the AFP [Australian Federal Police], and the Today Tonight’s of the world to educate the public on mobile security”, she said.

“Banks need to own this.”

The Teachers Credit Union was currently best at informing customers about mobile security, she said.

Fraud investigators for other major banks told SC they agreed with Vale’s comments.

“The message is that, rather than convince financial organisations that a phone is computer, try a fresh approach,” Vale said. “Ensure they know what it is, know what it does, and understand the risk and [let them[ put in mitigation controls.”

The finance sector’s discussions come as the Federal Government prepares to release a community cyber awareness whitepaper designed to help educate the public on electronic fraud.