New Zealand banks of the future could do away with a complex range of mortgage products and instead offer their customers just one “home loan” that they then customise to the customer’s needs.

That’s one of the suggestions in a new report from PriceWaterhouseCooper. 

It says there are six major forces shaping the banking industry; changing demographics, technology, consumer behaviour, Asia, government and a subdued global economy. The report focuses on Australian banks, which own the four big banks in New Zealand. PwC said the same issues applied in both countries.

The report states that, in order for banks to become more agile in an ever-changing world, they must become simpler, smaller and more deeply connected to customers.

It points to mortgages as an area that would benefit from simplification. The report said home loans were a singularly important source of economic profit for banks but were confusing for customers.

"A customer visiting the home lending page of some banks today is confronted with a range of products at very different price points (at time of writing, as much as 150 basis points from one bank), but with ambiguous product names and descriptions, and prices inconsistent with advertised features."

It said a recent review of bank marketing materials revealed issues such as a "discount" offer that was, due to special deals on some other products, one of the most expensive on the page, and a 'no-fee' offer that was difficult to evaluate due to insufficient information about the fees on alternative products.

"Is it any wonder customers get confused, lose confidence and then seek the advice of a mortgage broker – whose commissions absorb a substantial share of the economic profit on the deal?"

PwC said banks could offer just one mortgage product, called "home loan". It could then be customise online with the rate and fees adjusted on-screen in real time. "What if fees were simple – one monthly fee, ideally zero – rather than requiring a close read of the product disclosure statement to understand? How many more customers would have the confidence to make their own choices – contacting the bank only to close the deal, or even completing the entire application online? What does all this do to a bank’s distribution costs and product margins?"