Drawing on experience in a number of markets, and analysis of the competitive environment, we formed the hypothesis that the focus should initially be on market leading pricing and direct channels (internet and telephone). Direct channels were selected as we could relatively quickly build this capability at low costs and direct customers were typically more mobile. Several rounds of market research confirmed the scale and nature of the market opportunity, and financial analysis confirmed this should generate attractive returns. We also used our research to test and refine the propositions.

The market research confirmed that 71% of customers were disenchanted with their financial institution, including 44% who had disengaged with the sector. Those who were actively seeking “a better deal”; used price as the benchmark, disliked complexity, expected a basic level of service and were comfortable with direct channels in return for better rates. Specifically they were 50 – 65 years of age and making the most of their pension, or 25-35 and setting up their finances. Both groups were looking for a fresh approach, identifying with brands such as VirginBlue and Vodafone. They were especially concentrated in the metro areas of NSW, VIC and QLD. They were most likely to try products they did not need to commit their entire relationship to, i.e. credit cards, savings accounts and unsecured personal loans vs home loans and transactional bank accounts.