The rapid change of the financial world has presented a range of processes that challenge the way we once thought about traditional banking, and it can be easy to fall behind the times.
2019 is well and truly here, so why not familiarise yourself with the banking buzzwords for the year ahead that will push you to the front of the pack!
1. Open banking
As of July 2019, the way your personal finance is controlled will never be the same again. Open banking will give Australians the opportunity to access and move their personal banking data around between other banks, financial institutions and organisations. Why? This open data domain is anticipated to create stronger competition and will transform the way Australians communicate with the banking system to find better deals and save money overall. Interested in learning more? Check out our comprehensive Open Banking guide.
2. Global Currency Accounts
With more people travelling and living abroad, the demand for easier ways to transfer or pay in a foreign currency are at an all time high. IMT or international money transfers have enabled people to transfer money more easily but require users to have a bank account at either end of the transfer. In 2018, we saw the introduction of global currency accounts with global banking powerhouses Citi and HSBC introducing everyday bank account that also act a multi-currency account all in one. Both can carry up to 10 currencies in the account, making it your one stop global banking solution that allows you to switch seamlessly between currencies and have complete control over your money no matter where you are. Will Australia’s banks play catch up and introduce their own versions in 2019? Only time will tell.
3. Credit card limits
There are changes to the ways that banks and credit providers determine the credit limit of new credit card applications. From January 1, credit limits are set to a customer’s capability to repay the credit limit within three years. The reform is designed to strike a reasonable balance between allowing consumers to get into debt traps without restricting access to this type of finance according to ASIC. Last year Mozo research found that one fifth of Australian cardholders are trapped by long term debt. To avoid falling into debt, check out our tips for credit card management.
4. Rate personalisation
One of the key advantages that is anticipated to come with open banking is the opportunity of personalised finance products. Peer-to-peer lenders such as Harmoney and RateSetter have already adopted a model of risk based rate tiers for borrowers. Open banking will take it to the next level with personalised rates potentially for home loans, personal loans and credit card applications. To get your credit history in tip top shape in preparation see our tips on how to improve your credit score.
2019 is expected to be the year of digital banking with Xinja being the first neobank with a full banking license in Australia. Setting out to challenge the practices of traditional banking, neobanks are 100% digital and plan to lead the pack in personalised banking by using artificial intelligence to keep track of your data and customise your banking experience. Watch this space.
6. Banking royal commission fallout
An endless saga of Australian banking malpractices sparked an investigation into Australia’s financial services late last year.
The banking royal commission’s final report on Australia’s banking malpractices is due in February and it is expected to present a list of some pretty far-reaching recommendations that will cover everything from responsible lending practices, employee remuneration and advisor commissions to regulation reform. Whatever the final recommendations, one thing has already been made clear - better customer outcomes. How the banks deliver of this is still to be seen but we can expect to see better products and services in 2019.
7. Best Interest Duty
One of the key aspects of the Banking Royal Commission was the highlighted conflict of interests between the commissions paid to advisors and brokers and the products that consumers were sold. A best interest duty is one of the possible recommendations that will come out of the BRC which would give borrowers transparency and this more confidence that they are getting the best deal, without the risk the broker or advisor is getting kickbacks from particular lenders.
8. RBA interest rates rise
Last year, Australians were warned that interest rates will rise at some point, and borrowers were urged to get their house prepared for higher interest expenses. But it’s been a record holding eight years since the rates were last raised, so the one question of everyone has is: Will 2019 be the year of a rate rise? So far the odds of a rise have been continually pushed further into the foreseeable future due to current trends in household income and droughts across the country, but only time will tell. Be sure to check in each month with our RBA rates update.
9. Post pay
Post pay services such as Afterpay and zipMoney really took off in 2018 and now account for more than 10% of all physical online retail in Australia. As the modern day layby, you can shop up a storm both online and in store and pay the purchases back in installments. While post pay services can be a way to spread the cost of a purchase to help with budgeting, as our research found out last year, it can also lead to overspending and debt. Check out our guide on the traps of post pay services and tips on how to spend wisely for 2019.
10. Chat bots
More and more financial institutions are backing artificial intelligence technologies that provide human-like conversations and are designed to make their life a little easier. Welcome to the world of chatbots - an online device that can understand, engage and provide customer service just like regular humans. NAB, UBank and the Commonwealth Bank are some of the banks already using virtual bankers that are able to recognise thousands of variations of common financial questions.
Convenient and fashionable - PayWear is transforming the way we can pay for goods and services. You’ve probably seen people pay for their coffee using a watch, a wristband or even a 2018 Mozo Experts Choice Award winning payment ring, but now there's a new generation of wearable technology set to hit the market in 2019. Westpac kicked off its second generation of PayWear late last year giving customers more options to tap and go, introducing a keychain, sew on patch, pins and a silicon tag that can go onto watches. Maybe 2019 will be the year of the banking sunnies?
With all this new lingo and banking info it’s a good time to make sure your cash is stashed in the right account. Compare bank accounts below or check out the Mozo bank account comparison tool to compare all accounts in our database that’s updated daily.