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Is this global banking giant about to disrupt ANZ, CBA, NAB, & Westpac?

James Mickleboro
ASX Bank

The recent successful initial public offering of small business lender Prospa Group (ASX: PGL) looks set to strengthen its position at the small end of the commercial lending market.

This could lead to the growing fintech company taking market share away from the likes of Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), and Westpac Banking Corp (ASX: WBC)

Unfortunately for the big four banks, Prospa isn’t the only company looking to steal market share away from them. One of the world’s largest global banks has revealed that it has its eyes on the Australian commercial banking sector as well.

Who is coming after the big four?

According to an AFR report, Citi is ramping up its operations targeting high-growth companies with international aspirations.

The global banking giant plans to take on the big four by offering business customers who operate in multiple jurisdictions the convenience of a single banking partner. It also intends to compete sharply on price.

Citi’s head of commercial banking in Australia, Alex Syhanath, told the media outlet that it will be targeting companies turning over $250 million to $1 billion a year. He also revealed that the bank will be targeting companies outside the mining, resources, and property sectors.

Mr Syhanath appears to believe that the big four have focused too much on property and have let their core banking skills slip, opening up an opportunity for fintech companies and global banks.

He said: “You see fintechs like Greensill for instance. They are targeting this mid-market quite heavily and the reason they are doing so well is because the incumbents aren’t doing so well or paying attention to what the opportunity is.”

The global banking giant advised that it has signed up eight customers since February and has a strong pipeline of prospective customers. New customers include the likes of Luxury Escapes and fashion retailer Showpo.

What now?

Whilst the loss of any kind of market share is never a good thing, I think it’s a little too soon to panic about Citi’s move. 

In light of this, I’m not overly concerned by this news and continue to see the banks as buys at their current levels.

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Motley Fool contributor James Mickleboro owns Westpac shares. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019