Australia's major banks face competitive threats from technology companies, with brand recognition and a physical branch presence becoming less relevant to an increasing number of customers. In launching his firm's latest Australian Mortgage Industry Report, Scott Manning, JP Morgan banking analyst, said Australia's major banks needed to recognise the rapid penetration of digital technology will challenge the traditional barriers to entry provided by their existing oligopoly. "Australian retail banking customers are now one of the highest users of online, smartphone and tablet appliances as a percentage of total interactions globally. Despite the strong take up of digital, allowing consumers to make more informed decisions, this is yet to reflect as a material driver in Australian bank customer satisfaction measures," Manning said. "As a result, technology companies may be able to use their brand power to potentially penetrate retail banking market share without building a physical presence." Manning noted that if the Googles and Apples of the world are to shake up Australia's financial sector, the overall regulatory framework will play an important role. This consideration is particularly relevant in the context of the ongoing Murray Financial Services Inquiry. His analysis also showed that there was no "valuation uplift" for running more than one brand. The largest banks globally, including his own bank, JP Morgan, ran just one brand, Manning said. Looking more locally, his report showed that ANZ, which runs one brand, has the same proportion of its market cap attributed to "brand value" as Westpac, which runs five brands in its retail banking business and 11 brands in its wealth management business. "There is no big standout in terms of brand differentiation or increased value by running more brands," he said, and suggested that this opens the question of further consolidation of wealth management brands back into bank brands in the future. Manning also said JP Morgan's own retail operations in the US indicated a trend towards smaller bank branches by floor space, and this likely to happen among Australia's major banks. He cited comments by Phil Chronican, ANZ's chief executive officer, Australia, that his bank's branch floor space would be reduced by 20 per cent "over the next leasing cycle" and staff costs would also be reduced - but by just 15 per cent as fewer but better trained staff would be required. Martin North, principal at Digital Finance Analytics, who worked with JP Morgan on the report, said online usage trends indicate branches are becoming less relevant as a way to protect existing market share and attract deposit flow. Even in rural centres, improved technology meant more people were turning to digital devices for their banking, while groups such as self-funded retirees are more likely than not to turn to digital devices for their banking. The report also ranked Australian banks to other banks globally. According to the findings, less than 10 per cent of their enterprise value is attributed to