Has Australian banking just entered a new era in which long-suffering customers at last have a voice?
That’s certainly what the big four banks want consumers to believe after they spontaneously and simultaneously decided to scrap the unpopular $2 fee for using another bank’s ATM for withdrawals.
The impetus for this largesse, according to the banks, was recognition that customers resented paying the ATM fees. Such tender regard for customers could be just the beginning of banking-consumer nirvana.
But don’t bet on it. This is just banks being banks.
The first of the leviathan banks to announce the scrapping of the fee was Commonwealth Bank (CBA), followed within hours by ANZ, NAB and Westpac. The banks’ spruikers were uncannily on-message.
“We have been listening to consumer groups and our customers and understand,” CBA retail banking group executive Matt Comyn explained.
ANZ retail and commercial banking group executive Fred Ohlsson likewise declared that its decision to drop the ATM fee was “another example of acting on customer feedback”.
NAB chief customer officer Andrew Hagger was equally sympathetic: “We know it has been frustrating for [customers] to be charged to withdraw their own money from an ATM.”
Westpac consumer group executive George Frazis also felt his customers’ pain: “We understand that the ‘foreign ATM’ fee has been deeply unpopular with consumers.”
Such a happy coincidence that each of the banks should hear and heed the same message at the same time. Why do the big four banks insist on treating their customers like mugs?
The obvious answer is force of habit.
Given the banks’ new-found attentiveness to consumer feedback it is tempting to wonder which of their egregious fees and charges will be next for extinction.
Australians are slugged $4.4 billion annually in bank fees. Bank customers made 259 million withdrawals from ATMs belonging to banks other than their own in 2016, according to the Reserve Bank, which equates to $518 million in fees. However, this is easily eclipsed by other fees. Financial comparison website RateCity says Australians were charged $1.56 billion in credit card fees, $1.24 billion in home loan fees and $1.06 billion in transaction account fees in 2016.
If the big four banks are really concerned about addressing customer anger they might wish to review the usurious interest rates they charge for their credit cards. Not very likely.
It’s easy to see why ATM fees were the sacrificial lamb of choice. As infuriating as ATM fees are for consumers, for the banks they represent a much diminished source of revenue. The banks’ decision had nothing to do with goodwill. In reality they are responding to the fact that ATM patronage is in freefall.
A report released in May by the payments industry body, the Australian Payments Network (APN), shows that the move away from cash continues to accelerate as Australian embrace digital payments.
It shows that the number of ATM withdrawals last year dropped 7.5 per cent, following a 5.5 per cent drop in 2015 and a 4.7 per cent drop in 2014. Since 2011, ATM withdrawals have plunged 22 per cent.
The big four banks are members of the network.
The decision to scrap ATM fees simply brought forward an inevitable commercial decision but the banks are hoping that the PR boost will counter negative perceptions about the banking industry and take the sting out of Labor’s demand for a royal commission into banking.
CBA, in particular, can do with all the good PR it can generate. It hopes the ATM fees decision will turn the page on past scandals and divert attention from ongoing scrutiny by regulators.
As well as Federal Court action by financial intelligence agency AUSTRAC for “serious and systemic non-compliance” with anti-money laundering and terror financing laws, the Australian Prudential Regulation Authority has launched an inquiry into the bank’s governance, culture and accountability frameworks and the Australian Securities & Investments Commission is investigating whether the CBA board complied with continuous disclosure laws in relation to the alleged money-laundering breaches.
Unfortunately the Australian Competition and Consumer Commission (ACCC) has not had its interest piqued by the ATM fees announcement. The ACCC does not find it odd that the big four banks arrived at the same decision at the same time.
Collusion may be too bold a conclusion but it would not be unreasonable for the ACCC to question how the banks came to be as one on ATM fees.
At the least it begs the question of how competitive banking in Australia really is. Consumers may already have the answer to that.