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Speaker 1: This is what the flux. I'm Brett and I'm Justin

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Speaker 1: and it's Monday, the twenty second of December Floxam. Today

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Speaker 1: we are unpacking the biggest banking, financial services and fintech

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Speaker 1: stories of the year. Twenty twenty five was a huge

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Speaker 1: year for finance, not just the markets moving up and

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Speaker 1: down thanks Trump tariffs, but also the way that money

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Speaker 1: actually works, which gow the RBA cut the cash rates

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Speaker 1: three times, major banks make them big cuts, and FinTechs

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Speaker 1: shake up everything from payments to crypto to strap yourselves

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Speaker 1: in For the three biggest stories in the finance face

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Speaker 1: in twenty twenty five.

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Speaker 2: Three lethal stories today. Juzzy boy, Oh, let's do it

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Speaker 2: for our first. A and Z Bank is cutting four thousand,

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Speaker 2: five hundred jobs and scaling back consultants in a five

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Speaker 2: hundred and sixty million dollar restructure under its brand spanking

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Speaker 2: new CEO.

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Speaker 1: Howe up to ten percent of the workforce. That just

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Speaker 1: gone like that? Know me all? Okay?

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Speaker 2: So A and Z is one of Australia's Big four

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Speaker 2: alongside CBA, NAB and Westpac.

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Speaker 1: He's a fun factor, be man. A and Z actually

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Speaker 1: has a larger global workforce than both NAB and Westpack

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Speaker 1: despite being the smallest of the four. Not for long though,

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Speaker 1: ain Z's new CEO, Nunomatos, who started in May, has

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Speaker 1: begun to swing the acts yeap. He's now announced three

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Speaker 1: thy five hundred redundancies of ANZED staff by next September.

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Speaker 1: And on top of this, an Z will also cut

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Speaker 1: ties with a thousand consultants and contractors.

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Speaker 2: And it will affect teams in technology, procurement, risk and retail.

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Speaker 1: The Beeman. Here's the twist. These job cuts are just

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Speaker 1: for now because ANZ promised to maintain its head count

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Speaker 1: by twenty twenty seven.

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Speaker 2: That was a commitment it made as part of its

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Speaker 2: acquisition of Suncourt Bank.

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Speaker 1: So now it effectively allows A and Z to cut

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Speaker 1: jobs in the short term, so long as the number

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Speaker 1: of staff are re hired by twenty twenty seven.

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Speaker 2: And Jazi Boy, this is all part of an Z's

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Speaker 2: plan to improve its cost to income ratio.

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Speaker 1: So what is the key learning here.

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Speaker 2: One of the most closely watched metrics in banking is

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Speaker 2: the cost to income ratio, also known as an efficiency ratio.

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Speaker 1: It measures how much a bank spends to earn a

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Speaker 1: dollar of revenue.

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Speaker 2: The lower the ratio more efficiently the bank is operating.

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Speaker 1: For example, am Z spends roughly fifty two cents in

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Speaker 1: costs to generate one dollar of inca, so its cost

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Speaker 1: to income ratio is fifty two percent.

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Speaker 2: Whereas Combank's cost to income ratio is about forty nine percent.

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Speaker 1: And it's believe that Westpac and nabs cost to income

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Speaker 1: ratio is even lower than combat.

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Speaker 2: So Juzi Boy job cuts and a reduced reliance on

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Speaker 2: consultants will help lower costs and improve this ratio.

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Speaker 1: And the man cutting costs is one of the clearest

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Speaker 1: ways to lift returns as long as it doesn't also

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Speaker 1: hit sales, given up to ten percent of its workforce

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Speaker 1: will be cut now. Interestingly, be Man, Amz's new CEO

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Speaker 1: has been known to enter a new business or business

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Speaker 1: division and cut immediately.

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Speaker 2: Yes, he did this at HSBC in Mexico where he

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Speaker 2: used to work, as well as when he moved to

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Speaker 2: HSBC in Europe.

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Speaker 1: And now he's taking the cost cutting playbook and bringing

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Speaker 1: it to an Z. For our second story, Mcquarie has

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Speaker 1: smashed the big four banks in July this year, snapping

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Speaker 1: up nearly forty percent of all new Australian homeowns red.

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Speaker 2: The big banks must be in even bigger shock here,

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Speaker 2: Jusie boy, what's going on?

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Speaker 1: Hey? Sir. Mcquoe was originally found in nineteen sixty nine

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Speaker 1: and it's best known for being one of Australia's leading

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Speaker 1: investment banks.

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Speaker 2: But that ain't everything it does because it also has

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Speaker 2: other arms like its asset management arm and its wealth

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Speaker 2: management arm.

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Speaker 1: And of course it's retail banking arm, which has personal

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Speaker 1: banking and mortgages the Juza boy.

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Speaker 2: Over the last few years, McQuary's retail bank has gone

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Speaker 2: hard in the mortgage space.

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Speaker 1: And clearly it's paying off. Get this. According to APRA,

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Speaker 1: Mcquarie landed nearly forty percent of all new home loan

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Speaker 1: lending in the month of July.

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Speaker 2: That means their mortgage book grew six point four times

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Speaker 2: faster than the big four banks in July.

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Speaker 1: Interestingly, though, be Man, more than ninety five percent of

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Speaker 1: these loans going to mcquarie were being originated via mortgage brokers.

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Speaker 2: And clearly mcquarie is becoming a very significant threat in mortgage.

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Speaker 1: Land aka the cash cow of banking.

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Speaker 2: So what is the key learning here?

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Speaker 1: Mortgages may seem boring compared to flashy investment banking, but

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Speaker 1: they're one of the most lucrative parts of the financial system.

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Speaker 2: Yeah, banks love offering home loans because they're sticky, they're

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Speaker 2: long term products and they give banks reliable income for decades.

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Speaker 1: In Australia, mortgage accounts are worth over two point two

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Speaker 1: trillion dollars, which is more than sixty percent of all

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Speaker 1: bank lending.

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Speaker 2: And right now the big four control around seventy percent

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Speaker 2: of this market and it's their single biggest profit engine.

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Speaker 1: Think about it this way, by man, if the bank

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Speaker 1: makes just one percent margin on one hundred billion dollars

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Speaker 1: of mortgages, that is a billion dollars in annual revenue.

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Speaker 1: For Combank, which has a homeland book of around six

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Speaker 1: hundred billion dollars, mortgages are the core driver of its

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Speaker 1: over ten billion dollar and your pro profit and that

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Speaker 1: is why competition in this space is.

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Speaker 2: Fierce, and that's why mcquarie is leveraging an army of

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Speaker 2: mortgage brokers to funnel all leads through its front door.

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Speaker 2: For our third and final story, air Wallex has pulled

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Speaker 2: off Australia's second biggest VC raise ever with a three

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Speaker 2: hundred and thirty million dollar raise. But it's not without

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Speaker 2: some controversy.

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Speaker 1: Juzzy boy, always a little bit of controversy around airwollxb man,

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Speaker 1: So tell me what's going on here.

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Speaker 2: So air Wallx is a payments giant founded in Melbourne

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Speaker 2: in twenty fifteen. It started out facilitating cross border business payments.

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Speaker 1: Since then it's expanded into cards and spend management and

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Speaker 1: other financial services too.

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Speaker 2: Get this one. It took air Wallex nine years to

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Speaker 2: hit five hundred million dollars in annual occurring revue, but

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Speaker 2: then it only took them one more year to double

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Speaker 2: that to a billion dollars in annual revenue. And now

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Speaker 2: air Wallex is writing that momentum to raise three hundred

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Speaker 2: and thirty million US dollars in a series G round

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Speaker 2: series G yep exactly. And this raise values airlex had

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Speaker 2: eight billion US dollars, which is up about a third

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Speaker 2: from only six months ago. But duzzy boy, Airwallex has

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Speaker 2: its chest out right now. It claims it didn't even

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Speaker 2: need this money from the capital raise.

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Speaker 1: Now, No, no, no, it was just about the momentum

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Speaker 1: and taking advantage of the moment So what is the

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Speaker 1: key learning here? Raising capital isn't always about necessity. It's

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Speaker 1: also about buying optionality.

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Speaker 2: You see, when a company is performing well, like doubling

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Speaker 2: its revenue in twelve months, investors are very eager to

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Speaker 2: jump on board. And when investors are eager to jump

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Speaker 2: on board, it allows the company to raise money on

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Speaker 2: highly favorable terms and jazy boy. Many strategically thinking startups

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Speaker 2: go down the path of raising when they have the

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Speaker 2: momentum rather than when they actually need the money.

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Speaker 1: So for Airlex, being fully funded means they can control

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Speaker 1: the timing of their eventual initial public offering.

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Speaker 2: And they don't have to rush to list if the

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Speaker 2: market is weak.

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Speaker 1: Because stuff flox sham, they were the three biggest banking,

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Speaker 1: financial services and inintech stories of twenty twenty five. Join

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Speaker 1: us on Wednesday for a deep dive and recap into

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Speaker 1: one of the hottest topics of twenty twenty five, artificial intelligence.

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Speaker 2: Thanks for listening and we'll see you on Wednesday.