Banking year in review: Seven changes which turned heads in 2017
2017 has truly been a year of flux in the Australian banking sector, with plenty of upheaval and a heap of changes and new products that have altered the way we bank now, and will bank in the future.
So in case you were too busy keeping up with the mess that was Australian politics, or following Kylie Jenner’s pregnancy saga, here are seven of the Mozo picks for biggest banking changes and innovations in 2017:
We said goodbye to…
1. ATM fees
And not a single tear was shed. Well, not many.
Over one weekend in late September it was announced that almost 10,000 ATMs across the country would soon be fee-free for good - a massive change and a boon for Australians sick of banking fees. Initiated by the Commonwealth Bank, the other three big banks were quick to jump on board the move less they be left behind to face the ire of their own customers. While you still can’t avoid fees at every ATM (looking your way pubs), most Australians can now enjoy access to withdrawals without seeing that $2 fee disappear from their bank accounts.
What they said: “Australians have complained for some time about being charged fees for using another bank’s ATM. We have been listening to consumer groups and our customers and understand that there’s a need to make changes that benefit all Australians, no matter who they bank with. This is one of the steps we’re taking to make that happen.” - Matt Comyn, Group Executive of Retail Banking Services at the Commonwealth Bank
2. Interchange card fees
The start of Spring also brought another welcome change for consumers - this time to debit and credit card fees. Joining big businesses, who had already taken on the change in 2016, small businesses were no longer allowed to charge ‘excessive’ surcharge fees for card purchases from 1 September.
The change means that all businesses are now only permitted to pass on the true cost of transactions for example, 1% surcharge for Visa Debit, 1.5% for Visa Credit and 2% for American Express. Although cards not issued by an Australian Bank (e.g. some American Express and Diners Club cards) and other payment options such as BPAY, Paypal, cash and cheque can still attract above-cost surcharge fees.
3. Cash (kind of)
Yes, yes, you may still have a couple of $20 notes stuffed in your wallet and a small change jar slowly gathering dust at home, but 2017 really was the year that proved Australia is heading (gradually perhaps) towards cashlessness. For the very first time card overtook cash as Australia’s payment method of choice, with the RBA’s most recent Consumer Payments Survey showed that the number of card payments have doubled since 2007.
According to the Visa Cashless Cities Report, both Sydney and Canberra are world leaders when it comes to the digital payment revolution, while Australians in general are increasingly turning to digital and mobile solutions for their banking - with a report in July finding that banking app use on mobile has doubled in just two years.
What they said: “It seems contactless payments are shaping up to be a major part of Australia’s spending future, especially as it becomes more and more acceptable to make small purchases under $20 by tapping your plastic. The increased acceptance of small Tap ‘n’ Go purchases just might be the final nail in the coffin for cash.” - Kirsty Lamont, Mozo Director
We said hello to…
1. New payment methods
Apple, Samsung and Android Pay may have made a big splash in 2016, but they continued to gain even more traction in 2017 with a host of major banks and other players (including ANZ, HSBC and Westpac) jumping on board the respective mobile payment options.
But the real emergence of 2017 came in the ‘wearables’ payment sector. Perfect for the forgetful among us who somehow manage to leave both our phones and wallets at home, payment bands with embedded microchips allow wearers to tap and go in the same way they would with a card for purchases under $100. Westpac (PayWear) and Heritage (HOVA wristband) both pioneered their own forms of wearable payment bands, while many other banks including the Commonwealth Bank, ANZ and NAB have provided integration for customers with existing technology like Fitbits and Garmins.
2. Saving-friendly bank account features
While it was hardly the year of bumper interest rates, a number of innovative products made debuts in 2017 to help savers make the most of (the slightly depressing) returns on their savings account interest rates. Chief among these new products was the AMP Bett3r Save Account which gives savers the opportunity to keep their spending and saving on track with three purpose-specific linked accounts: the Pay, Save and Spend Accounts. In fact, the account picked up a 2017 Mozo Experts Choice Award for Banking Innovation.
UBank and ING also introduced handy savings features of their own. The UBank Sweep tool will literally sweep funds across from your transaction to savings account (maintaining a minimum balance of at least $500 at all times) so you can make the most of the 2.87% special interest rate. Meanwhile, the ING Everyday round up tool does just that - it rounds up every purchase you make using the Orange Everyday Visa Debit card to the nearest $1 or $5 and deposits that difference in your ING Savings Maximiser Account.
What they said: “The research shows that we’re literally throwing away money by paying with cash. We’re encouraging customers to boost their loose change instead of losing it. Everyday Round Up allows customers to roundup leftover change from purchases automatically into their Savings Maximiser account.” - Tim Newman, Head of Product at ING
3. Peer-to-peer lending
In case you hadn’t noticed, the peer-to-peer (P2P) economy is already a pretty big thing (think eBay, Uber and AirBnB to name a few companies). In fact, according to the Sharing Economy Trust Index released by peer-to-peer lender RateSetter in February, the peer-to-peer or ‘sharing’ economy is now worth a whopping $15 billion a year in Australia.
Making up an ever-growing slice of that pie is the peer-to-peer personal loan market, with lender Harmoney coming onto the Australian market with a boom in February to join previously established lenders like RateSetter and SocietyOne. And with peer-to-peer lenders steadily increasing their customer base and picking up a host of Mozo Experts Choice Awards, it wouldn’t surprise to see P2P loans become even more popular with borrowers in 2018.
4. Debit card rewards points
Last, but certainly not least, was the surprise introduction of a rewards points earning scheme from Debit Mastercard earlier this month - the first of its kind in Australia. While rewards points have traditionally been associated with credit cards, the move from Mastercard is allegedly part of an attempt to woo younger Australians with ‘millennial-friendly’ rewards including travel discounts and entertainment offers. The move from Mastercard could herald a serious change in the way we think about rewards cards and points earning, but we’ll have to wait for 2018 to see if this alternative becomes a more popular option!
What they said: “It’s interesting that they’ve (Mastercard) decided to run with this now, especially since we’ve seen the value offered by rewards credit cards decline over the last year or so. I think Mastercard are trying to take advantage of this with a rewards program that should appeal to millennials without encouraging them to take on more debt.” - Peter Marshall, Mozo Product Data Manager
While 2017’s been a wild ride, there are already some seriously big changes appearing on the horizon. So for a sneak peak on the year to come, check out Mozo’s seven financial trends you won’t want to miss in 2018.