Australia Retail Banking Market Overview, 2031

Key Insights

• The Australia retail banking market is a mature, highly concentrated financial services market supported by a universal banking system regulated by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC). The market serves a population of approximately 27 million through a network of authorised deposit-taking institutions.



• The Australian banking sector is dominated by four major banks Commonwealth Bank of Australia, Westpac, National Australia Bank, and ANZ which collectively hold approximately 72% of total Australian lending assets of ADIs. Following ANZ's acquisition of Suncorp Bank, the big four's combined market share reached 74%.

• The Australian banking sector demonstrated resilient financial performance in FY2025. The four major banks reported a combined profit after tax of $29.8 billion, broadly flat with a marginal reduction of 0.5% compared to FY2024, while total operating income increased to $93.9 billion from $89.9 billion. The sector maintains strong capital positions, with the Common Equity Tier 1 ratio at 12.4% in June 2025.

• Digital banking adoption in Australia has reached saturation. According to the Australian Banking Association's 2025 Bank on It report, more than 99% of banking transactions are now conducted online, with digital interactions surging 70% since 2019. Mobile wallet payments reached $160 billion in 2024, with transactions growing 23-fold since 2019. Digital wallets accounted for 49% of in-store transactions by November 2025.



• Retail lending remains the cornerstone of retail banking revenue, underpinned by a housing loan market that continues to set records. Total housing loans among ADIs reached $2.43 trillion in December 2025, increasing by $17.8 billion in that month alone. New mortgage lending surged 18.9% in the September quarter of 2025 compared to the same period a year earlier.

• The competitive landscape is being reshaped by digital-first challengers and fintech platforms. Up, a digital bank backed by Bendigo and Adelaide Bank, was named 2025 Neobank of the Year by Roy Morgan for the third time, achieving an industry-leading 91.9% customer satisfaction rating. Revolut has applied for a full Australian banking licence and is progressing through APRA's application process.

Market Outlook

• According to the Bonafide Research report, "Australia Retail Banking Market Outlook, 2031," published by Bonafide Research, the Australia retail banking market was valued at more than 26 Billion in 2025. This growth reflects sustained demand for mortgage lending, continued digital transformation investments, and the ongoing evolution of payment ecosystems across all retail banking segments.

• The Australian market is expected to benefit from the continued normalisation of interest rate policy and the resulting improvement in credit demand. The Reserve Bank of Australia's cash rate remains above neutral estimates, but declining inflation and easing financial conditions are expected to support household borrowing capacity.

• Residential mortgage lending is projected to remain the cornerstone of retail banking revenue, supported by strong population growth, housing demand, and government initiatives such as the 5% Deposit Scheme, which came into effect on 1 October 2025. The ongoing strength in the labour market has helped contain loan arrears at low levels.

• Digital banking is projected to remain the primary growth driver. The Australian Banking Association reports that 57% of the population now uses mobile banking, with 34% using a smartphone or tablet for online banking at least once a day. Banks are investing heavily in mobile-first platforms, AI-enabled customer service, and data analytics capabilities.

• The Australian retail banking market is expected to face continued competitive pressure from digital challengers and fintech platforms. Digital-first banks such as Up are gaining market share by offering lower fees, higher deposit rates, and frictionless digital onboarding. The buy now, pay later sector is expanding, with 20% of Australians holding BNPL debt.

• The market is expected to benefit from continued investment in payment modernisation. The Treasury Laws Amendment (Payments System Modernisation) Bill 2025 updates Australia's payments regulatory framework to enable the RBA to regulate all participants in the payments system, including digital wallet providers and BNPL service providers.

Market Dynamics

Driver: Digital Transformation and Mobile-First Banking Adoption
The Australia retail banking market is being fundamentally reshaped by the rapid adoption of digital banking channels. More than 99% of banking transactions are now conducted online, with digital interactions surging 70% since 2019. Mobile wallet payments reached $160 billion in 2024, with transactions growing 23-fold since 2019. Digital wallets accounted for 49% of in-store transactions by November 2025. This shift is driving substantial investment in mobile-first sales journeys, AI-enabled customer service, and data analytics capabilities. Customer satisfaction with banking channels remains exceptionally high, with the ABA reporting that 99.3% of customer interactions are now rated positively.

Challenge: Branch Network Rationalisation and Financial Inclusion
A significant challenge facing the Australian retail banking market is the ongoing rationalisation of branch networks and the implications for financial inclusion. According to APRA data, the number of bank branches nationwide fell 4.6% between June 2024 and June 2025. Banks have reduced the number of branches across Australia from 5,694 as of 30 June 2017 to 3,360 as of 30 June 2024, a reduction of 41%. This contraction disproportionately affects elderly customers, low-income households, and small businesses in regional areas. Cash use actually increased to 15% of payments in 2025, up from 13% in 2022, indicating that a significant segment of the population remains dependent on physical payment methods.

Trend: Mortgage Market Dominance and Government Housing Initiatives
The Australian retail banking market is experiencing a structural shift in retail lending, with mortgages becoming increasingly dominant. Total housing loans among ADIs reached a record $2.43 trillion in December 2025. New mortgage lending surged 18.9% in the September quarter of 2025. The Australian Government's 5% Deposit Scheme, which came into effect on 1 October 2025, has boosted low-deposit lending, with banks approving a record $5.4 billion worth of loans to owner-occupiers with deposits of 5% or less in the December quarter. APRA has responded by announcing limits on high debt-to-income home lending.

Policies

• The Australian Prudential Regulation Authority (APRA) is the primary prudential regulator for the Australian banking sector. APRA requires Australian banks to maintain a CET1 ratio above 10.25% to meet the "unquestionably strong" benchmark, and the sector maintained a CET1 ratio of 12.4% in June 2025.

• The Australian Securities and Investments Commission (ASIC) is the primary conduct regulator for the Australian financial services sector. In December 2025, the Federal Court ordered ANZ to pay $250 million in penalties for misconduct across its Institutional and Retail divisions, underscoring ASIC's increased focus on consumer protection.

• The Banking Code of Practice 2025 came into effect on 28 February 2025. The updated Code includes an expanded definition of a small business, enhanced inclusivity and accessibility obligations, more stringent requirements relating to selling debt to third parties, and a new obligation to take reasonable steps to meet with prospective guarantors.

• The Treasury Laws Amendment (Payments System Modernisation) Bill 2025, introduced in July 2025, updates Australia's payments regulatory framework to enable the RBA to regulate all participants in the payments system, including digital wallet providers and buy now, pay later service providers.

• The Home Guarantee Scheme, expanded in October 2025, supports eligible first-home buyers and single parents to purchase a home with a deposit as low as 5%. The scheme has contributed to a record $5.4 billion in low-deposit loans approved in the December quarter of 2025.

Segment Analysis

Australia Retail Banking Market By Product / Service • Retail Deposit & Account Services: A major revenue pool driven by net interest income from deposit balances. The Australian banking sector benefits from a strong deposit franchise, with deposit funding accounting for 78% of total funding at Commonwealth Bank. Transactional and savings accounts remain the top financial product for 86% of Australians, with debit cards at 61% and online savings accounts at 49%. The retail deposit market is highly competitive, particularly during periods of higher credit growth, as banks compete for funding to support lending demand.

• Retail Lending: The largest product segment, anchored by residential mortgages. Total housing loans among ADIs reached $2.43 trillion in December 2025, with new mortgage lending surging 18.9% in the September quarter compared to a year earlier. The four major banks dominate the mortgage market, with Commonwealth Bank recording the largest dollar increase in home lending, rising by approximately $4.6 billion to $611.5 billion.

• Cards & Payment Services: A major fee and transaction income driver. Cards remain the most widely used consumer payment method in Australia, with digital wallets accounting for 49% of in-store transactions by November 2025. Mobile wallet payments reached $160 billion in 2024, with over four billion mobile wallet transactions made in the past year. BPAY and internet banking payments also grew, with PayID adoption reaching 80% of respondents in 2025.

• Wealth & Investment Services: A growing segment as Australian banks expand advisory and investment offerings. The major banks have significant wealth management operations, with Commonwealth Bank's Retail Banking Services generating $13.39 billion in operating income in FY2025. Banks are investing in digital wealth management platforms to serve the growing affluent segment.

• Insurance & Other Fee-Based Services: An ancillary but important revenue pool. Banks distribute insurance products through branch and digital channels, with bancassurance remaining a key source of fee income. The growth in digital banking is enabling more efficient distribution of insurance products and expanding the addressable market.

Australia Retail Banking Market By Channel • Online Banking: The dominant and growing channel. More than 99% of banking transactions are now conducted online, with digital interactions surging 70% since 2019. Mobile banking is used by 57% of the population, with 34% using a smartphone or tablet for online banking at least once a day. Digital wallet usage has grown 23-fold since 2019, reaching $160 billion in payments in 2024.

• Offline Banking: Branch networks remain important for complex products, relationship banking, and customer acquisition, although their role continues to decline. The number of bank branches nationwide fell 4.6% between June 2024 and June 2025. Banks have reduced the number of branches across Australia from 5,694 as of 30 June 2017 to 3,360 as of 30 June 2024, a reduction of 41%.

Australia Retail Banking Market By Customer Age Group • 18–28 Years: A growing customer segment by revenue contribution. Younger consumers are the most digitally engaged, with mobile wallet adoption highest among this cohort. This cohort prioritises mobile-first experiences, lower fees, and seamless digital onboarding, prompting traditional banks to accelerate digital transformation and develop youth-focused products. Digital-first banks such as Up are particularly popular among this demographic.

• 29–44 Years: A major revenue-contributing age segment, driven by mortgage origination, family formation, and peak credit card usage. This cohort holds a significant share of mortgage and consumer credit debt. The strong growth in housing lending through 2025 has been particularly beneficial for first-time buyers, who are increasingly eligible under the expanded Home Guarantee Scheme.

• 45–59 Years: Peak wealth accumulation years, with significant contributions to wealth management, investment products, and insurance. This cohort represents a key target for retirement planning and wealth preservation products. The growth in retail investment balances and the increasing penetration of insurance products are largely driven by this demographic's demand for diversified investment products.

• 60 Years and Above: A slower-growing age segment but a significant holder of deposit balances. Senior customers remain an important source of stable funding and wealth management revenue. They are more likely to prefer branch-based banking and personal advisory services, highlighting the need for banks to maintain accessible branch networks and human advisory capabilities.

Australia Retail Banking Market By Bank Type • National Banks: The dominant bank type by revenue, including the four major banks Commonwealth Bank of Australia, Westpac, National Australia Bank, and ANZ. These institutions collectively reported a combined profit after tax of $29.8 billion in FY2025. Commonwealth Bank's Retail Banking Services generated $13.39 billion in operating income in FY2025, representing 46.16% of total group revenue, and lifted cash profit 2.5% to $5.40 billion. The big four hold approximately 72% of total Australian lending assets of ADIs, rising to 74% following ANZ's acquisition of Suncorp Bank.

• Regional Banks: A significant bank type by retail market share, comprising regional banks, credit unions, and building societies. These institutions focus on serving local communities and small businesses, often with a more limited product range than the major banks. The regional banking sector has undergone significant consolidation, but remaining institutions continue to play an important role in financial inclusion. Macquarie Bank has emerged as a significant competitor, with its mortgage book exceeding $160 billion.

• Neobanks and Others: A growing bank type, including digital-first banks such as Up, and fintech platforms. Up, backed by Bendigo and Adelaide Bank, was named 2025 Neobank of the Year by Roy Morgan for the third time, achieving an industry-leading 91.9% customer satisfaction rating. Revolut has applied for a full Australian banking licence and is progressing through APRA's application process. AMP launched its mobile-first bank in February 2025, targeting small business owners and everyday customers. These digital-native institutions are gaining market share by offering lower fees, higher deposit rates, and frictionless digital onboarding.

Australia Retail Banking Market Economics

• Retail banking pricing in the Australian market is significantly influenced by the Reserve Bank of Australia's monetary policy. The cash rate remains above neutral estimates, but declining inflation and easing financial conditions are expected to support household borrowing capacity. Australian banks have relatively modest net interest margins due to a focus on lower-margin retail consumer banking and strong competition in both lending and deposit markets.

• Deposit costs remain a critical economic factor. The Australian banking sector benefits from a strong deposit franchise, with deposit funding accounting for 78% of total funding at Commonwealth Bank. The retail deposit market is highly competitive, particularly during periods of higher credit growth, as banks compete for funding to support lending demand.

• The economic value of retail banking relationships is measured in terms of deposit balances, lending volumes, fee income, and cross-sell metrics. Digital banking users are more likely to conduct transactions and use credit products more frequently, with mobile banking used by 57% of the population. Banks are investing heavily in data analytics and AI capabilities to improve customer segmentation and personalise product offerings.

• Digital bank economics are fundamentally different from traditional banks, with lower operating costs and digital-first customer acquisition strategies. Up, Revolut, and other digital-first providers are leveraging this cost advantage to offer competitive rates and lower fees while maintaining sustainable unit economics. The competitive pressure from these challengers is compressing margins in certain product categories, while traditional banks retain advantages in complex products such as mortgages and wealth management.


Considered in this report
• Historic Year: 2020
• Base year: 2025
• Estimated year: 2026
• Forecast year: 2031

Aspects covered in this report
• Retail BAnking Market with its value and forecast along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Product / Service

• Retail Lending
• Retail Deposit & Account Services
• Cards & Payment Services
• Wealth & Investment Services
• Insurance & Other Ancillary Services

By Channel

• Online Banking
• Offline Banking

By Customer Age Group

• 18-28 Years
• 29-44 Years
• 45-59 Years
• 60 Years and Above

By Bank Type

• National Banks
• Regional Banks
• Neobanks and Others