Despite a string of bank scandals, we are still fairly reluctant to take our business elsewhere, and it could be costing us dearly.
Only one in six Australians have switched banks over the past three years, a survey of 1000 people conducted by Galaxy Research for the Australian Bankers Association (ABA) revealed this week.
Of those, 68 per cent said it was easy and 21 per cent found it difficult, usually because of the time and effort involved, including the hassle of changing automatic payments, the ABA said.
Younger people were more likely to make the switch. A quarter of respondents aged 18 to 39 changed banks in the last three years, compared to just eight per cent of customers aged 60 and over.
The results were published prior to an ABA meeting with banks, consumer groups and regulators on Thursday to discuss issues facing Australians who want to switch lenders.
The ABA declined to give The New Daily any details of what was discussed at the meeting, saying this was to enable all who attended to speak freely.
But a spokesperson did say it is important for bank customers to “vote with their feet”.
“It means they can take advantage of the benefits of competition and get the products and services they need more easily.
“The ABA’s latest research shows a lot of people do switch banks and most people find it easy. We recognise however, that people do have difficulties with switching and that’s why we have brought together consumer groups, regulators and card schemes to explore ways we can make it easier.”
Another recent survey, by comparison website finder.com.au, of more than 2000 people found two in five Australians are still with the bank they joined as a child.
Finder.com.au money expert Bessie Hassan said 67 per cent of people who did switch ended up with a better deal.
“The real concern here is that Australians simply could be getting better interest rates or lower fees on their accounts if they’re prepared to do their homework,” Ms Hassan told The New Daily.
“It depends on your personal situation, but chances are if you go looking for a better deal you will find it. The reward is worth the research.
“If you’re reluctant to switch, ask for a discount or for fees to be waived.”
Or is it perfectly logical?
Dr Marcus Banks, consumer finance expert at RMIT University, said it is often rational for bank customers, especially the poor, to not devote precious time and energy to finding better financial products.
“There’s an assumption there that people have the time and mental bandwidth to [consider switching]. But poverty reduces mental bandwidth, and those who are very busy just don’t have the time to think it through,” Dr Banks told The New Daily.
“We’re interviewing people at the moment who are low income, and the key things for them are maintaining relationships in the household, looking after the kids, dealing with the critical issues. Issues like switching banks are put on the back-burner because, in the course of daily life, it’s not seen as significant.”
Australians should keep in mind that the hassle of shifting all their direct debits to another bank will be made much easier in coming months because of the Reserve Bank’s revamp of the banking system.