Only one in five Australians are actively looking to switch banks
Only one in five Australian customers are actively looking to switch banks, leaving many on deals that could be costing them more. HERE’S WHAT YOU NEED TO KNOW
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Only one in five customers are actively looking to switch banks leaving many on deals that could be costing them more.
It comes after the Australian Competition and Consumer Commission’s chief Rod Sims revealed earlier this week he wanted to launch an inquiry into the competitive strength of the banks and said they were not rewarding loyal customers.
A new report compiled by Deloitte on behalf of the Australian Banking Association found in the past year only 15 per cent of Australians switched their everyday transaction accounts, 10 per cent switched credit card accounts and 5 per cent switched their mortgages.
About one in five are actively searching for better deals on these products.
Earlier this month the Reserve Bank of Australia cut to the cash rate to a record low of 0.75 percentage points, but none of the big four banks passed on the cut in full.
The ABA’s chief executive officer Anna Bligh said the report showed “Australians are quite active consumers”.
“The more customers that talk to their own banks to get a better deal and look around at other banks, the stronger competition will be in the market,” she said.
Ms Bligh said it had “become much easier over the past three to five years” to switch mortgages.
The banning of mortgage exit fees back in 2011 also removed another barrier for customers looking to jump lenders.
In 2019 there has been three cash rate cuts totalling 0.75 percentage points however the big four banks have only passed on an average of 0.57 percentage point cuts.
Consequently they have been heavily criticised for looking after their shareholders ahead of their own customers.
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Consumer group Choice’s spokeswoman Erin Turner attacked the bank sector’s competitiveness and said it comes “at the same time as many of them fail to pass on full interest rate cuts for mortgage holders”.
“Banks hide behind opaque pricing, sneaky white-label products and confusing discounting tactics to prevent consumers from switching into a cheaper priced loans,” she said.
“Only five per cent of mortgage holders have switched banks in the past twelve months — this is an alarmingly low figure in an environment where big banks aren’t passing on full rate cuts.”
The report quizzed 1000 Australians and also found a majority of customers are satisfied with their products including transaction accounts (79 per cent), credit cards (75 per cent) and mortgages (67 per cent).
In 2020 Open Banking will be rolled out which gives consumers the right to transfer their personal transaction data with another institution and help score themselves a better deal.
Ms Bligh also said with the rollout of six new banking licences in the past 18 months, including digital-only banks such as Xinja and 86 400, it was becoming easier for new entrants to come into the sector.
“It’s the first time we’ve seen new banks approved since the 1980s,” she said.