Dissatisfaction with Australia’s large banks is high among the community. This has led to the ascendancy of smaller banks and credit unions. Although the major banks still enjoy around 80% of banking business, this could slip further in coming years. The most common complaint from customers is outrageous and exorbitant fees.
The large banks still use a mainframe-based computer system that is 30 years old. This makes it hard for them to compete with global banks, which means they are unlikely to reduce fees in the short to medium term.
Smaller banks such as BankWest, based in Perth, are able to compete well by employing better computer technologies, which are cheaper and more flexible than the old mainframe computers. Chief Information, Joe Deragon, says the reason for this is that the computer system provides an all-in-one banking solution of corporate, retail and consumer services. The new internet system has produced a remarkable outcome with improved performance of 300%.
The cost savings that BankWest has made from its new innovative software and hardware technologies have been passed on to its customers. Its TeleNet Saver Account offers high introductory annual interest rate of 6.80% for the first 12 months, then a still competitive rate of 6.25%, with no fees at all. No-fee high interest rates are extremely attractive to customers.
Another major complaint of large banks is that they are drastically understaffed, especially when you consider their very large customer bases. Smaller banks like BankWest, HSBC Banking and ING Direct have lower customer bases, so there tends to be a higher staff-to-customer ratio.
ING Direct has only been in operation for seven years but is performing strongly with profits over $90 million in 2004, and competing well with the major banks. ING Direct has a flexible approach, allowing customers of other banks to link their ordinary low-interest accounts to an ING Direct Savings Maximiser. This account has a competitive variable rate currently at 6.00% per annum, and no bank fees, minimum deposit, or minimum balance.
Citibank also offers a competitive high-interest Citibank Plus Account with a competitive annual rate of 6.00%, with a low $5 monthly account fee, no minimum deposit or minimum monthly balance. This account also gives you unlimited free transactions and charge no fees for using other banks ATM’s. For more information.
Credit unions provide consumers with an alternative to traditional banking. They are community-based and are mutuals, which mean their members own the credit union. So every member gets an equal vote on how the credit union is run. This obviously means that fees tend to be lower for many products such as savings and investments, and interest rates for loans are competitive. However credit unions have fewer branch locations and shorter opening hours than many banks. They also tend to have a smaller number of banking options than a full service bank.
So if you are not satisfied with the products and services your current bank is providing with, have a look around to see what can assist you to make the most of your hard-earned money. You owe it to yourself and your family.
Both smaller banks and credit unions are competing well with the major banks.
The smaller banks offer high-interest accounts with no fees that can be linked to existing accounts at other banks.
Credit unions are run by members, resulting in low fees, competitive high-interest rate savings accounts and competitive loan rates.