RACQ Bank may be a welcome addition to the home loan market, as Aussies lose trust in big banks
Queensland car insurer RACQ, which last year merged with QT Mutual Bank, has now launched as RACQ Bank, and hopes to offers Aussies an alternative to the big banks when it comes to banking products like home loans.
RACQ Bank CEO Ian Gillespie told The Australian, “We’re a long way from being anywhere near competitive with a big four bank, but what we can offer members is a reasonable alternative where people can get products that are just as good, just as accessible, from an organisation they’re more likely to trust and one which is based on a very different business model.”
As the big banks face heat over their conduct recently - in particular CommBank, which has been rocked by scandal after scandal, starting with money laundering allegations - Mozo Data Manager Peter Marshall said it wouldn’t be surprising to see customers trying out alternatives.
“Customer-owned institutions are, understandably, often also focussed on cutting the costs of banking for customers, by returning profits to their members,” Marshall said.
“With the big banks copping so much heat, it only makes sense that people might start looking around for other options where not only are the products better value, but where they feel they can trust the faces behind the counter.”
A recent survey from Yell Creative, in partnership with YouGov, found that Aussies ranked financial services dead last in terms of trust. Some customer sentiments the report uncovered included that, “The people in the [financial] industry are only there to benefit themselves” and that “Financial services firms prioritise their own profit over their customers’ best interests.”
Despite the big banks being in hot water, Gillespie told The Australian that “it’s challenging to compete with the big banks because they have scale advantages.”
“But most of the tier-two and tier-three banks suffer from lack of scale. We feel that one of the things we bring to the table, that’s not there now, is a bit of scale of our own,” he continued.
RACQ Bank has over 1.6 million members, 34 stores across Queensland which will soon be offering banking products, and has already converted 13 QT Mutual branches.
But RACQ Bank may be competition for the big banks yet - among the banking products on offer from the newly formed institution, is its Mortgage Saver Special, a home loan that comes with a low 3.74% rate, 0.92% lower than the average big four variable rate of 4.66%.
According to Mozo’s repayment calculator, on a $500,000 home loan, this difference could save a borrower more than $77,000 over the life of a 25 year loan.
Time to re-evaluate your home loan? Head over to our mortgage comparison tool to check out some of the offers available on the market today.