With news that the bank switching reforms introduced back in 2012 have done little to compel us to switch banks, Vaughn Richtor, CEO of ING DIRECT explains why “the more, the merrier” is a good thing for consumer banking.
I don’t think many people would describe banking as a particularly enjoyable activity, do you? But getting to grips with everyday finance is necessary if we want to secure our future and make our money work for us.
And it’s encouraging to see, from ING DIRECT’s latest Financial Wellbeing Index, that an increasing number of Australians are taking this on board. Saving has remained at consistently high levels for the past few quarters, almost half (43%) of consumers are paying down their mortgage ahead of time, and comfort with credit card debt is at its highest in 3 years.
It’s clear to me that the days when people took a back seat approach to their finances are in decline; today more Australians are seeking greater control when it comes to managing their money.
I think part of the reason people have struggled with finances in the past is that historically it’s been all too hard – think complex products, confusing jargon, and lengthy Terms and Conditions. We hear a lot of talk in the industry about new products but what about doing what’s right for the customer?
The good news is that this consumer appetite for greater financial control is driving banks to innovate and come up with ways to make it easier for people to manage their money – and this is a really positive thing for consumers as it promotes competition in the marketplace.
So, how do we incentivise competition even further? It’s interesting to note that the switching reforms introduced back in 2012, which were designed in part to encourage consumers to go after a better deal, have had minimal impact on consumer behaviour. From my perspective, it’s not about introducing more regulation; it’s about increasing personal financial awareness so that people have the confidence to take control of their finances.
It’s no secret that the Australian banking industry is one of the most concentrated in the world – and that while consumers have choices, the options are often fairly similar. The more alternatives there are (not just new market players, but products and ways to do banking), the better the options will be for consumers, and the easier it will be for Australians to make the right financial decisions.