How Australia’s big banks ran into an even bigger fish

Australia’s major banks have long been the biggest fish in the domestic economic pond. But lately, the big four have looked like the minnows in their escalating fight with the biggest companies in the world: US technology behemoths.

Whether it’s over accusations that big tech is free-riding on the country’s payment system, or failing to do their bit fighting scammers, it has become common hear the big local banks point the finger at overseas tech companies which are valued at many times the banks’ size.

The big four’s combined market value of about $663 billion makes them a dominant force on the ASX, but a small fraction of say, Apple’s market value of almost $US3.8 trillion ($5.4 trillion).

In unusually blunt comments, Commonwealth Bank chair Paul O’Malley last month warned of the competitive threat of “hyperscalers” (tech giants such as Amazon or Google that are investing in computing power on a massive scale) extracting value from the country “without having built the infrastructure and the institutions that support that value.”

CBA is a big user of AI itself, but even so, O’Malley called for a “national conversation” about AI, global competition, and what it means for Australia’s economy.

“US tech delivers incredible capability, great customer experience. We wouldn’t use their products if they weren’t good. But we have to be really clear about when we’re going to defend the economic rents staying in Australia to support Australian way of life, not being extracted without us getting the fair share of it,” O’Malley said.

Days later, Australian Banking Association chief executive Simon Birmingham launched a separate broadside against big tech, taking aim at how Google and Apple benefited from the domestic payment system.

“Global platforms like Apple or and Google Pay benefit from that system. They sit on top of it, intermediate it and monetise it. They enjoy the benefits but avoid the obligations: no equivalent regulation, no duty to invest back in the system that enables their operations,” he wrote in The Australian Financial Review.

What’s behind the outbreak of bank warnings about big tech’s growing power? Are these just self-serving claims from banks trying to protect their highly profitable patch, a time-tested PR tactic to point to a larger issues as a distraction, or do they have a point?

Banks have long complained that tech companies are coming to cut their lunch, but lately those warnings have been growing louder as digital payments have surged, and as policymakers mulled whether more regulation is needed. The Reserve Bank’s surcharging reforms last week, which will cut bank revenue, added to bank warnings about overseas giants extracting more revenue from the domestic system.

The banking lobby argues its contest with technology giants is not a fair fight, because today’s regulations allow tech players to extract value from the banking system without contributing to the cost of the payments infrastructure. Whether these claims raise legitimate questions, or are driven by banks purely trying to protect their privileged economic position, is up for debate.

The fight over digital wallets

The warnings from banks about tech companies threatening the local industry have a long history. For example, in late 2017, former NAB chair Ken Henry warned of the possibility that banks would be challenged “beyond our ability to cope by the big IT platform providers, the Googles and the Apples and so on.”

The clearest example where banks have lost out to tech players is in payments, as the public has embraced paying on smartphones through apps called digital wallets. CBA told a parliamentary committee more than half of all in-store payments on CBA cards are on a digital wallet, a fivefold increase since 2021. Apple takes a fee on every payment made on its wallet, Apple Pay, while Google does not charge fees for its wallet. The banks’ concerns are partly about the fees they pay Apple, but also over the way it restricts access to the near-field communication (NFC) chip on an iPhone that allows you to make a payment. Banks have for years sought access to the chip, hoping it that would give banks greater ability to offer payment options through their own apps, rather than Apple’s.

Jarden analyst Matt Wilson says the threat to banks from technology giants has so far been contained to payments, and he thinks some of the banks’ criticism of tech companies is overblown.

“The threat has not eventuated to the extent that it could have. Really the only place where Apple has penetrated the market is putting the banks’ credit and debit cards on the iPhone,” Wilson says.

Over the longer term, however, Wilson sees a real risk of tech companies disrupting the banks’ business models. For example, he says, if Apple or a tech giant introduced a stablecoin (a type of crypto asset) that could effectively function as a deposit account, that would be a significant risk to banks.

In the US, Apple has started offering its own credit cards (issued by a traditional bank), in a sign it is not only keen to get into payments, but also work with major financial institutions.

There’s also been a long-running concern in banking about how tech companies could use the huge amount of financial data they get on customers – such as how Afterpay’s owner, Block, can use the data on small businesses that it gets from its payment terminals. Square can use this data to assess credit risk and go head-to-head with banks.

Wilson sees these types of competitive threats – which could erode bank profits and their valuations – as the underlying reason for the tension between banks and tech companies. “The reality is the Australian banks enjoy a lazy oligopoly and have not been great at innovating,” Wilson says.

Wilson says it’s no coincidence that CBA’s leaders have been particularly vocal in criticising tech companies, as CBA’s lofty valuation means that it has the most to lose from new and deep-pocketed competitors from the tech sector.

Yet others, such as MST Marquee analyst Brian Johnson, think the banks have a fair point. Johnson says what makes Australia’s banking market stable is the government guarantee on deposits of up to $250,000 – to which banks indirectly contribute through an annual major bank tax.

“Someone like Apple participates in that stability and does not pay the levy. Does that make sense?” Johnson says. “I’m no apologist for the banks. I’ve got no particular iron in the fire one way or another. Some of the behaviour does look at little bit oligopolistic, but on this one I think they are right.”

Labor MP Ed Husic, who is chairing a parliamentary inquiry into digital wallets, also says banks have a “strong argument” about the power of big tech, including its hold over the NFC chip.

“Apple absolutely does possess huge market power with the hold it enforces over its NFC tech. That amount of power in one firm is rarely healthy,” says Husic, a former industry minister who lost his portfolio after last year’s election.

“Having said that, the question for the banks is: even if governments acted on their concerns and forced Apple to open up its tech, what would be the material benefit for average Australians or small businesses?”

“Additionally, even if the banks got access to Apple’s NFC, what guarantee would we have that they’d invest in genuine R&D to come up with something innovative to help customers? At the moment all I see is some big businesses arguing against the power of other bigger businesses, while the ordinary consumer is an afterthought.”

Apple, for its part, says it does invest in Australia, and says Apple Pay has benefited competition in banking by helping smaller financial institutions such as credit unions or app-focused banks such as AMP Bank and Bendigo and Adelaide Bank’s Up.

“Digital wallets like Apple’s represent a rare opportunity to challenge this concentration– Apple Pay gives smaller players access to the same technology as the largest banks,” Sean Dillon, Apple’s senior director for competition law and regulation told a parliamentary inquiry in February.

The rise of tech lobbyists

Banks are also contending with the fact that tech giants are expanding their influence and lobbying clout.

The tech giants’ lobby group, the Tech Council of Australia, didn’t exist before 2021 but has, in the space of five years, built the kind of political infrastructure that took the mining and banking lobbies decades to assemble. It represents some of Australia’s largest employers like Atlassian, Microsoft and Canva.

When the TCA launched, it had 25 member companies and three ambitious goals: a million Australians in tech jobs by 2025, $250 billion in economic contribution by the end of the decade, and making Australia “the best country in the world” for building and investing in technology companies.

The last goal was aspirational, while the first two have been largely achieved ahead of schedule.

In a report released in March this year, the TCA declared the tech sector now contributes an estimated $248.5 billion to the Australian economy – equivalent to 8.9 per cent of GDP. The sector, it claimed, is the single biggest driver of long-term productivity growth in the country.

That number has helped reframe the regulatory debate. When the banks demand tighter controls on digital platforms, the TCA can counter with a simple question: do you really want to put the brakes on the one sector keeping Australian productivity alive?

Australian Electoral Commission disclosure data for 2024–2025 shows that companies, executives, and individuals with direct technology-sector interests donated $13.1 million to the major political parties. That figure dwarfs the financial sector’s $5.1 million contribution, and even eclipses the fossil fuel and minerals lobby, which donated $10.1 million.

Atlassian co-founder Scott Farquhar donated $1.5 million, primarily to climate-focused political vehicles that influence major-party policy. His co-founder, Mike Cannon-Brookes, contributed $1.3 million. The banking sector has no equivalent individual donors at that scale.

The group now also sits at the federal government’s powerful Economic Reform Roundtable, shaping economic policy alongside Treasury and the Productivity Commission.

For the banks, the TCA’s rise creates a political problem they haven’t faced before. The Australian Banking Association remains a well-resourced and politically connected operation. Birmingham, its chief executive and a former Morrison government minister, knows how Canberra works. But the ABA’s core message – that the banking system is critical national infrastructure deserving of protection – sounds defensive when placed alongside the TCA’s forward-looking productivity pitch.

Where the banks once held unchallenged supremacy in Canberra, they now face a rival power centre that speaks the language politicians most want to hear: jobs, growth, productivity, and the future.

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