Macquarie, dubbed the “millionaires’ factory,” is reshaping Australia’s mortgage market with its digital lender, now holding 7% of the A$2.5tn mortgage sector and 6% of deposits—a stark contrast to its 2010 entry when it had zero share. The group’s deposit book grew 25% year-on-year, fueled by a 4.5% annual savings rate on balances up to A$2mn, capitalizing on Big Four banks’ reliance on stagnant, non-interest-bearing accounts. Analyst Brian Johnson calls its growth a “machine,” outpacing rivals like Commonwealth Bank over five years.

The shift began in 2012 with Macquarie’s digital bank, leveraging third-party brokers for faster approvals and AI-driven tools like Q for customer service. Its strategy targets lower-risk borrowers with competitive terms, bypassing traditional branch networks. The A$200bn deposit base—double that of four years ago—now funds expansion, with the banking arm achieving 13% return on equity in December 2023. Competitors like CBA’s Matt Comyn have raised concerns about regulatory advantages, but Macquarie insists on a “level playing field.”

While Big Four banks depend on core operations for dividends, Macquarie monetizes asset management and commodities trading to subsidize its digital push. This model, once reliant on trading profits, now prioritizes long-term customer retention. Critics argue rivals may struggle to match its agility, as seen in Sydney’s Martin Place, where Macquarie’s modern HQ overshadows CBA’s historic marble branch. The sector faces “due for a shake-up,” per analyst Matthew Wilson, as digital-first models gain traction.

Macquarie’s success lies in exploiting saver inertia—71% of Australian accounts received no bonus interest in 2023, per regulators. By offering transparent rates without “hoops,” it’s luring deposits away from legacy banks. With its banking unit contributing 21% of operating income in H2 2023, up from 15% in 2021, the group signals no ceiling for growth. Yet, profitability remains tied to its ability to convert digital traction into sustainable revenue streams.