The Australian financial services market grew by $1.23 trillion in FY21 – more than it did in the preceding three years combined.

Roy Morgan‘s Banking and Finance Report found that the sector is now worth $10.9 trillion and COVID-19 marked a substantial boom for the sector.

That boom was felt across all four main categories of financial services.

In order of their respective share of the market these four categories are owner-occupied homes (35.2%), wealth management (28.3%), traditional banking (23.8%) and direct investment (12.8%).

Roy Morgan CEO Michele Levine credited it to the Federal Government’s stimulus programs, much of which ultimately flowed through to the sectors.

“The huge injection of hundreds of billions of dollars of stimulus by the Federal and State Governments to support businesses and families forced into financial distress by the measures used to fight the COVID-19 virus has flowed straight into the financial services market,” she said.

“All four main segments of financial services have increased by at least $200 billion in value from a year ago.”


Who benefited the most?

Although owner-occupied homes held the largest share of the market, traditional banking saw the biggest increase, rising by $500 billion compared to a year ago.

“For many Australians the Government stimulus went straight into the bank account with a lack of options for spending it with international (& for much of the time domestic) borders closed and travel restricted,” Levine noted.

“During the early parts of the pandemic Australia’s household saving ratio soared to as high as 22% in the June quarter 2020 according to the ABS, the highest level since the early 1970s even as the country entered its first recession for three decades since 1990/91.

“The huge amount of stimulus injected into the economy through programs such as the $89 billion JobKeeper wage subsidy has supported the economy over the last year and is still having an impact today with house prices continuing to rise despite a series of lockdowns around the country over the last few months.”


What now for the Australian financial services market?

Levine noted the growth in the financial services market has come despite COVID-19.

As a consequence the “third wave” was not expected to have a significant impact on FY22’s figures with Australia’s vaccination campaign heating up.

“Although the next few months are set to be tough ones for many Australians forced out of work by the lockdowns there is an optimistic view that once the vaccination thresholds are reached towards the end of this year the economy will quickly recover from this ‘third wave’ of COVID-19,” she said.