Money Your Budget The old switcheroo: What you need to know if you want to change banks
Updated:

The old switcheroo: What you need to know if you want to change banks

Two banks with twisting arrows showing customers swapping.
Switching banks has never been as easy as it is today.
Share
Tweet Share Reddit Pin Email Comment

Switching banks has become somewhat of an Aussie pastime since the banking royal commission unveiled its worrying findings in early 2019.

And it’s easier to do than ever before.

In the next six months alone, 12 per cent of Australians over the age of 18 (2.275 million) say they’re likely to change financial institutions – far more than the 1.558 million playing cricket or 1.547 million who played AFL in 2018, according to data from analytics firm, Nielsen.

The Customer Owned Banking Association, which represents institutions like Gateway Bank, Heritage Bank, First Choice Credit Union and others, has already notched up record customer growth from the backlash against the big four: ANZ, Commonwealth Bank, NAB and Westpac.

The idea of shifting all your finances from one provider to another can seem a huge challenge fraught with tedious paperwork, but Kirsty Lamont, director of financial comparison site Mozo, said switching has become much simpler.

“The process of switching banking providers is not nearly as onerous as it used to be in the past. A lot of the hurdles that people used to experience in the past are being removed,” Ms Lamont said.

“These days it’s entirely possible to get a home loan online, sign up for a bank account with a new digital bank online without ever having to physically present any ID.”

Choosing a new bank

Ms Lamont told The New Daily the first step that hopeful switchers need to take is to work out whether they want to use just one provider for their financial needs or are happy to cherry-pick different products from different banks.

Both have their benefits, Ms Lamont said.

Using a single provider can offer convenience by keeping everything together, so everything can be managed through a single app or viewed on a single statement. Some banks may even offer discounts for bundled products, she said.

Picking and choosing products from multiple banks, however, gives customers the freedom to choose the products that best suit their needs and offer the most competitive rates, potentially saving them thousands of dollars.

The second step is to identify which characteristics of your current provider are the most annoying or frustrating – high fees, slow transfer times, poor customer service – and look for banks offering similar products or services without these problems.

Some banks will offer special but short-lived benefits for new account holders, but Ms Lamont said unless you have the time and capacity to move banks every time these deals end, it’s more important to look for a bank with an attractive long-term proposition.

Pulling the switch

The actual process of switching banks can be done in just five steps, according to comparison site Canstar:

  • Compare your current bank with others
  • Open the new account
  • Compile a list of your direct debits
  • Transfer your direct debits
  • Transfer remaining funds and close your old account

Compiling and then transferring any direct debits is an important part of the process, Canstar said, but again, it’s simpler than it might seem.

“If you ask your new bank to help you switch, they will likely be able to contact your old bank for you and get a complete list of direct debits and credits over the past 13 months,” Canstar said.

“Alternatively, you can contact your existing bank and ask them to give you the list yourself, but you may need to prepare for a sales talk as they could try to convince you to stay.”

Once that list is compiled, your bank should even be willing to transfer those debits on your behalf, but this will require you to fill out an additional form (and it isn’t 100 per cent foolproof).

“Once you’re signed up to a great deal though, don’t just set it and forget it – it is important to make sure you do regularly check your products every one or two years to make sure that the ones you signed up for are still competitive,” she said.

Comments
View Comments