While banks are the major asset holding financial institutions in Australia there are other major players in this arena. The increase the economic power of the banks and deregulation of the 1980's has increased the market share over other financial institutions such as NBFI's(non-bank financial institution), super funds, and other managed fund accounts (Lewis and Wallace 1997, 76). According to Wallace (1997,77) there are 3 major reasons for these changes. "Large banks have an advantage in competition, Australian banks have significant advantages in the form of customer loyalty and extensive branch networks, with the record profits in the industry the banks have access to increasing amounts of capital and finally many of the newer banks in the industry had no clear strategy when they entered the market, giving the big 4 an advantage." Now that banks have come into the market they are competing on several different levels with other financial institutions, "insurance companies and superannuation funds compete directly in the market for managed funds, and their products compete directly with instruments provided by the funds management arms of banks (Wallace and Lewis, 1197, 233). However as noted by Wallace and Lewis (1197, 233) life insurance and superannuation funds still comprise 80% of the managed funds sector.
In 2002 the insurance industry in Australia held $173.9 billion in assets (Vinley 2003, 36). Insurance companies hold this large amount of assets because they have policy holders paying in monthly sums that may never be paid out or are paid out in smaller sums than were paid in. Insurance companies then use these assets to make money in financial markets through managed funds. Australian banks have sought to enter the insurance market and compete with the existing firms. According to the Wall Street Journal(2005,1), Commonwealth Bank, one of the big 4 banks in Australia recently reported a 50% gain in first half profit which was a result of their wealth management business and a steady result from their insurance arm. The ability of banks to expand into other financial services has affected the insurance industry as the Big 4 banks in Australia now compete with them. The insurance industry has now also begun to move into the domain of other financial services in order to maintain their asset base. Vinley (2003, 36) points out that insurance companies have seen a "decline in assets, but this has been offset by significant increases in their managed funds operations, particularly superannuation. The percentage share of superannuation assets has increased to 14.5 % from 1990-2002."
In Australia, superannuation is paid into the funds by employer contributions under the Superannuation Guarantee Charge and by individuals as voluntary contributions (Frino 2005, 2). Superannuation funds make their money by charging small fees for asset management as well as making returns by investing the large amount of assets they have. As stated before insurance companies are now creeping into the superannuation market, but so are Australian banks. They have become one stop shopping for customers in the