It certainly has been a disappointing day of trade for the Westpac Banking Corp (ASX: WBC) share price.
In afternoon trade its shares are down 2% to $25.68 despite there being no news out of the banking giant today.
Why has the Westpac share price dropped lower today?
It isn't just the Westpac share price that is dropping lower today.
Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), and National Australia Bank Ltd (ASX: NAB) shares are all trading around 1.5% lower this afternoon and acting as a major drag on the ASX 200.
There are a couple of potential catalysts for this decline.
One is profit taking ahead of the Royal Commission final report release next week. Investors may be locking in gains after all the banks surged notably higher over the last four weeks
Another catalyst for today's decline could be news that digital banking start-up Volt Bank has been cleared to start accepting deposits from the public.
This morning it became the first completely new start-up to be licensed as a retail bank in the Australian market since 1981 after receiving an authorised deposit-taking institution (ADI) licence from the Australian Prudential Regulation Authority (APRA).
Investors may be concerned that this could be the first of many neobanks to be granted a fully-fledged banking licence, adding to competition in the industry, especially in the millennial market.
While I think that neobanks could disrupt the banking industry, I feel it will be some time before they take a meaningful slice of the market.
In light of this, I suspect today's decline is more likely to be down to profit taking ahead of the Royal Commission final report.
Should you buy the dip?
Although I think all the banks are in the buy zone right now, given how close we are to the release of the Royal Commission final report on February 1, it might be prudent to keep your powder dry until the report is in the public domain and the recommendations are fully understood.
