National Australia Bank is working on plans to launch a new retail bank under a different brand. Last month, the bank created a new business group to look for ways of using technology to deliver low-cost services to groups not well represented in the bank’s customer base.

The focus is on young people and self-directed consumers and investors, who are technologically savvy and would use the internet, mobile phones and other alternative distribution mechanisms.

A NAB spokesman confirmed yesterday that the bank’s Australian chief executive, Ahmed Fahour, made an internal announcement in May that a new business group, Star Direct and Alliances, had been set up under general manager Gerd Schenkel.

The new group has its own board, whose members include Fahour, Steve Tucker, the executive general manager for wealth management in Australia, Greg Sutherland, the executive general manager for strategy and marketing, and NAB general counsel Anne Ward. The board will ensure that planning for the new group runs in parallel with the strategy for the existing retail business.

No firm plans have been made yet. Schenkel has been given a mandate to explore a wide range of products, technologies and partnerships.

There are a number of precedents for what NAB is proposing to do. In 1998, UK insurance group Prudential set up an online bank called Egg, which turned into a successful retail bank and was sold this year to Citigroup for around $1 billion.

Last year, ANZ launched onedirect, an online home loan business. Sources say it has not done well. The same goes for Commonwealth Bank’s online mortgage business, Homepath, which accounts for less than 1% of the bank’s home-loan sales.

The big banks are looking for ways to deal with competition from low-cost competitors such as ING Direct and RaboPlus, as well as to attract customers whose business would not be profitable under current distribution and service arrangements.

Oxygen is one suggested name for NAB’s new budget bank. If anyone can improve on that, please email Ahmed Fahour.

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Peter Fray
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