Dedication to the Big Four banks is continuing on a downwards spiral as Aussies turn their backs on the major establishments in favour of smaller customer-owned banking institutions following the scandalous Royal Commission, a new study has found.
Instead of opting for the most well-known Commonwealth Bank, Westpac, ANZ and NAB, a new report has revealed Australians are seeking alternative options for everything from everyday banking to loans. In a major shun to the once loved favourites, the Quarterly ADI Statistics report, released by the Australian Prudential Regulation Authority, found as trust of the banks dwindles, so do customers.
This was proved obvious in the data over the past 12 months with the customer-owned banking sector’s housing loans increasing by 7.8 per cent, while the major banks saw a growth of just 2.6 per cent. Not only this, credit unions, mutual banks and building societies now hold more than $121 billion in assets; an increase of 1.7 per cent compared to the last quarter.
“After the Financial Services Royal Commission many Australians were questioning whether their bank put their interests first and began seeking an alternative that focused on them, not shareholders,” Customer Owned Banking Association Chief Executive Officer Michael Lawrence explained to Starts at 60. “It’s no surprise that Australians are turning to the mutual model after realising that they’ve been treated second best by the investor owned banks.”
Lawrence claimed the sector has attracted a plethora of new customers thanks to the pleasing customer satisfaction scores and competitive interest rates, leading to the spread of innovative services. The CEO said the customer-owned banking sector provides for Aussies and can ensure Aussies will always be the priority.
“Australians wants, and deserve, to be put first by their bank,” he explained. “Thankfully, there’s an entire sector with a 150 year legacy of doing just that. These figures are a positive indicator of improving competition, but now is not the time to become complacent. If greater customer outcomes are the goal, then greater competition is the means.”
The release of the new statistics comes weeks after the Morrison Government outlined its long-awaited plan to reform the financial services sector, with a promise to overhaul the four big banks and restore the trust of Australians in the system within a year’s time. Treasurer Josh Frydenberg listed the party’s schedule for the next year detailing their plan to address the 54 recommendations directed to the government in the royal commission’s final report.
The politician claimed around one third of the government’s commitments will be implemented or have legislation by the end of this year, while close to 90 per cent will be completed by mid 2020 with the remaining introduced by the end of next year. “The need for change is undeniable and the community expects that the government’s response to the royal commission will be implemented swiftly,” he explained in a statement.
“Implementing the recommendations of the Royal Commission are critical to restoring trust and confidence in Australia’s financial system and part of the Morrison Government’s plan for a stronger economy.” In order to follow through with these plans, Frydenberg explained the Treasury and Office of Parliamentary Counsel will be provided with an additional $9.3 million which will be added to the $12.1 million provided in this year’s budget.
The changes to the industry will be monitored over time with an independent review scheduled for three years’ time to ensure improvement is being felt by Aussie consumers. However, some in opposition parties slammed the plan, with the likes of Labor’s Jim Chalmers adding his two cents to the government’s proposed changes to the industry. Taking to social media, Chalmers hit out at Frydenberg, claiming the timeframe is too long and Australians have suffered already from the delay in reaching this point.
In a series of posts on Twitter, the shadow treasurer described the announcement as “disappointing” for the victims of banking misconduct and claimed the Liberal Party are “dragging their feet” in implementing the recommendations. “Morrison and Frydenberg pretended to care about banking misconduct to get them through the election but since then and until today they’ve barely said peep about it,” he explained.
“They’ve been shamed into today’s announcements six months after they received the final report and only after pressure from @AustralianLabor, the media and the broader community.” Chalmers added: “We need to see the royal commission recommendations implemented properly and in a timely way so that Australians can have confidence that the rorts and ripoffs uncovered there have been properly dealt with.”
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