UBank aims to change bank business model

National Australia Bank's online unit, UBank, thinks it will permanently change banking industry business models, but BankWest says online banks will eventually be eaten by bricks and mortar parents.

Offering customers a better banking experience by using Web and mobile technologies is UBank's raison d'etre, says the bank's head of online, Christian Wood.

If successful, it's a model that will disrupt and transform the way banking is conducted, he told delegates at a technology conference.

"We believe we can do that by re-looking at the processes of the accepted norms in the banking industry and seeing if we can re-jig them using technology," he said.

Wood was speaking at FST Media's fifth annual Technology & Innovation - the Future of Banking and Financial Services conference, in Melbourne on Tuesday.

UBank aims to compete with global e-commerce brands, rather than other online banks, by integrating online banking into other tasks customers perform online.

Its own website will become UBank's smallest channel as customers bank through their Facebook or other sites they visit regularly, Wood says.

But Dave Williams, head of application delivery at Commonwealth Bank subsidiary BankWest, believes UBank's days may be numbered as a standalone banking brand.

"In Europe, a lot of the separate internet-only brands started to merge together with the parent bricks and mortar brand, so you saw (brand) contamination," he said.

"My guess is that in four or five years' time, that's where UBank will be."

UBank is already trying to change the face of banking, having launched an online-only mortgage product.

90 per cent of applications are processed in half an hour before the final documents are presented to customers online to download, Wood says.

"From then we can offer a 10-day settlement period."

But the lack of an advice-based relationship when taking out a mortgage prompted a warning from RESI Mortgage Corporation chief executive, Lisa Montgomery.

"I think the majority of consumers still view taking out a mortgage as being highly emotional, highly valuable, not to be entered into lightly," she told AAP on Wednesday.

Online mortgage products can be aggressively priced because there's less human interaction during the processing of applications, she says.

But they don't allow consumers to use their mortgages for wealth creation or to realign debt at the lowest interest rate possible and save money, she says.

"There's no relationship formed (and) no ongoing advice.

"If you don't have someone ... giving you that advice, then you don't know how to use it correctly and save thousands of dollars."

The complexity of processing mortgages was called into question only 12 months ago, when the Australian Institute of Conveyancers claimed Perpetual's mortgage services subsidiary wasn't licensed to handle legal work on behalf of ANZ Banking Group and other banks.

Mortgage processing was a complex business and most customers still wouldn't be comfortable applying online, ANZ Wealth chief information officer, Greg Booker said.

"That is changing as the Gen Ys come through and the whole generation shifts," he said.

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