Trending Financial News 16 August

13% of Aussies are switching banks

Trust in Australia’s banks and the financial services industry has dropped following the Hayne Royal Commission according to the results of a survey of 1000 consumers by market research firm Ipsos and consultancy Yell.

Almost 5 per cent of respondents said they had already changed banks as a result of the royal commission and another 8 per cent said they were considering making a change.

64 per cent of consumers polled by Ipsos said the Big Four put profits before people but they largely stayed with them nevertheless.

“82 per cent market share says a lot”, said Nigel Roberts from Yell.

“On a day-to-day basis, the big banks meet customers’ expectations.”

Small Aussie banks are connecting with customers

Trust in financial institutions has been damaged as a result of the revelations emanating from the Hayne Royal Commission into financial services in 2018, according to a survey of 1000 consumers by market research firm Ipsos and consultancy Yell.

But not all banks are equally untrustworthy.

“While banks of all types may be seen as trusted to keep Australians’ money safe, it’s the smaller banks that are trusted to put their customers’ interests before their own,” said Nigel Roberts from Yell.

“These smaller banks are doing a better job of connecting emotionally with customers and are growing as a result.”

“As more neobanks launch in Australia, with value propositions purportedly different to the Big Four, it is possible we will see further erosion of their dominance.

“More choice should mean better outcomes for customers,” said Roberts.

Deeming rate issue is the new Retiree Tax

Centrelink’s upper deeming rate is still too high, following a 0.25 percentage point cut last month, says the lobby group representing senior Australians.

National Seniors chief Ian Henschke said the recent cuts to deeming rates were inadequate and failed to reflect the rates available from savings accounts and term deposits.

From 1 September, Centrelink’s deeming rates will be set at 1 per cent for assets below $51,800 for singles and $86,200 for couples. Above those thresholds the deeming rate will be 3.0 per cent.

“This will become a major issue in the run-up to the next election,” said Mr Henschke.

Australia is getting a new lobster

Australia is getting a new $20 note, the governor of the Reserve Bank, Philip Lowe, announced this week.

The new $20 banknote, known by Aussies everywhere as “The Lobster,” will be released into general circulation on 9 October 2019. The RBA will be shipping the new notes out to banks before the release date to ensure they are in circulation from that date.

“As with any new banknote it will take time for them to be widely available,” said the RBA in a statement.

“Existing $20 banknotes can continue to be used, as all previously issued banknotes remain legal tender.” There are more than 170 million $20 banknotes in circulation

What ever happened to margin loans?

Margin lending has declined in Australia to the status of an obscure financial product. Margin loans provide funding for investments, such as shares. The number of margin loan client accounts fell below 100,000 in June for the first time since 2001.

The Reserve Bank reported that there were 98,000 margin loan accounts open in the June quarter, down 2.9 per cent from the March quarter and down 22.2 per cent over 12 months.

Bendigo and Adelaide Bank is a market leader in margin lending and reported this week that its margin lending book fell 10 per cent to $1.53 billion in the year ending June 2019.

There has been no growth in Australian margin lending since the GFC in 2008.

Bank outages trending up

Commonwealth Bank suffered a system outage last week, on the 3 August, affecting mobile payments, ATMs and eftpos services. This was just the latest in series of major system breakdowns affecting Australian big banks.

Overall, the numbers of financial system outages affecting retail payments and banking are on the increase and the severity of the outages is getting worse.

The number of serious outages was trending down until 2017, Reserve Bank Assistant Governor Michelle Bullock said last month.

“But then a sudden reversal in 2018. Incidents were more frequent and services took longer to be restored.

“While I can’t show information for individual institutions, I can say that the higher level of retail outages was pretty much across the board,” said Michelle Bullock.

“Around half of the number of service disruptions in 2018 were to mobile and online banking channels, while card services accounted for around 10 per cent of the incidents,” Ms Bullock told a conference of central bankers.

“The increasing complexity of the IT environment seems to be an important reason why incidents are taking longer to become resolved.”