Commonwealth Bank of Australia (ASX: CBA) shares are currently trading at just over $75, not far off its 52-week high of $79.88.
But an influx on new online-banking startups, the rise of peer-to-peer lending and upstart mobile banking services all represent a new threat not just to Commbank, but all of Australia's major banks.
But Commbank CEO Ian Narev is not all that worried, according to the Australian Financial Review (AFR).
He recently told a business forum that bank investors should not get carried away by the latest technology craze. As he says, "It's not necessarily those things which have made the most impact and got the most aura at the time."
The AFR says Mr Narev has been travelling the world looking at new technologies that can transform the bank's business over 5 to 10 years.
Analysts suggest Commbank is also in the most beneficial position to benefit from the return on its IT investment. CLSA analyst Brian Johnson notes that CBA has the second-highest balance of capitalised software at $1.95 billion, behind Australia & New Zealand Banking Group (ASX: ANZ) on $2.17 billion. Mr Johnson says CBA has the most to gain out of the big four from IT, after former CEO Ralph Norris implemented a new state of the art core IT system to replace one from the 1960s.
It resulted in CBA's half year expenses rising 6% to $4.75 billion, partly driven by rising staff and IT costs. But the bank regarded as Australia's best, thanks to its return on equity estimated at a whopping 18.7%, still managed to turn out a $4.27 billion profit in just six months.
But CBA is not alone implementing new technology, with National Australia Bank (ASX: NAB) boss Cameron Clyne claiming the bank's earnings growth was driven by developments in its digital banking strategy. And earlier this month, Westpac Banking Corporation (ASX: WBC) said the use of 'big data' allowed it to increase revenues by $22 million, by providing targeted offers to customers when they interact with the bank.
Foolish takeaway
Shares in CBA could certainly go higher from here. But that doesn't mean the current or higher prices are rational. The most likely threats to the bank include rising unemployment, lower credit growth and any potential shocks to Australia's housing industry.
