The days when everyone knew their local bank manager and it was one of the most prized jobs from Bondi to Bullamakanka are now over.
And our abandonment of loyalty means we are switching to online choices much quicker than anticipated.
Just released research shows that three in four Aussie customers are losing trust in banks and would switch to less costly online financial services
The new research suggests that consumers have a limit to the level of interest rates, fees and charges they can take before they lose trust in their banking providers.
Nearly three quarters of Australians say they have lost at least some trust in banks based on high interest rates and fees and 74% would consider switching their accounts, loans or transactions to more affordable online services.
Money Transfer Comparison, a comparison website that enables Australian individuals and businesses to source the best money transfer rates, commissioned a survey of an independent panel of 1009 Australians to gauge whether high loan interest rates and fees have caused Australians to lose trust in the banks.
The survey found that 42% of respondents have lost trust in some bank services and 28 % have lost trust in traditional banks as the best platform for all of their financial undertakings. A higher proportion at 75% of respondents are willing to switch their financial undertakings to these non-traditional services, when they believe their banks are charging too much.
Even before the RBA began raising interest rates in May 2022, banks were increasing fixed-rate loans in anticipation of ongoing cash rate increases. Some loan interest rates are sitting 4-5% higher than the current RBA cash rate of 2.85%.
Banks also charge wire fees of up to $40 for international money transfers and often higher exchange rates than specialist online money transfer platforms. Missed payments on bank loans and credit cards, and overdrawn accounts, incur fees of up to $15.
Specialist, alternative online financial services – such as money transfer platforms – can often be much more cost-effective options.
When comparing the results across the States, Money Transfer Comparison found that a relatively higher proportion of NSW and Victorian residents – who are likely paying off the largest mortgages in Australia - have lost trust in the big banks due to their high fees.
An equal 72% of respondents in each State have lost trust, followed by 71% of Queenslanders and West Australians and just 60% of South Australians.
Younger age groups are more likely to have lost at least some level of trust in traditional banking: 74% of 18-54-year-olds, compared with 58%t of over-65 respondents.
Going online
Money Transfer Comparison sought to discover whether Australians would look to switch to cheaper, online financial services when they really feel their bank interest rates, fees and charges are too high. Just one quarter said they prefer to use services by traditional banks regardless of the level of interest rates, fees and charges.
When Money Transfer Comparison analysed responses across the States, it found Queenslanders are the savviest bargain hunters, with 82% willing to be more diligent in comparing financial services provider fees and to switch to more cost-effective online services if they were being charged too much. Victorians seem to be most trusting of the banks, with just 68% saying they would compare providers and switch if they felt they were being charged too much by their banks.
When comparing age-based responses, the highest proportion of respondents likely to look for cheaper financial services elsewhere are in the 35-54-year age bracket at 80%. This was followed by 73% of 18-34-year-olds and only 67% of over-55 respondents.
Alon Rajic, Founder and Managing Director of Money Transfer Comparison, said: “Our research shows that the majority of customers are not blindly loyal to their banks – and will move elsewhere if rates and fees increase disproportionately.”
“With so much information available online and so much competition in the market, it is very easy for consumers to compare interest rates and fees across dozens of financial service providers.
“It is also fairly simple to switch to a new provider with the help of online comparison services – and I am encouraged to learn that three in four Australians are willing to make the switch to low-cost and innovative financial platforms if they can get a better deal.
“A significant consumer shift from traditional banks to innovative fintechs may also drive banks to increase their competitiveness.”
