With the rising cost of living and interest rates continuing to have an impact on Australians and their ability to manage expenses and service debt, a new survey has found that households are eager to explore more innovative ways to manage their finances and reduce costs. The survey uncovered that two-thirds (68 per cent) of Australians believe their banks are too expensive and have been unable to keep up with digital innovations offered by specialist fintech competitors and 67 per cent are willing to switch banks as a result.
The findings were derived from a survey of an independent panel of 1002 Australians, commissioned by global comparison service moneytransfercomparison.com, which helps Australians source the best rate in international money transfers. The full survey results, including breakdowns across ages and States, can be found here.
Through the survey, Money Transfer Comparison discovered that two thirds (68 per cent) of respondents believe some or none of the banks they use have kept up with digital innovations used by fintech services such as digital credit cards, buy now pay later, expense tracking and cashback and rewards programs. Specifically, 53 per cent believed some of the banks they use haven’t been able to keep up, while 15 per cent thought none of their banks have been able to do so.
Interestingly, a slightly higher proportion of older Australians do not believe their bank has offered innovative services. Two-thirds (69 per cent) of under-55s respondents thought their bank had been unable to keep up, compared with 65 per cent of under-35s.
Eight in 10 Australians think their banks’ fees are unreasonably high
The Money Transfer Comparison survey found that most bank customers believe bank fees and charges are too high for missed payments, overdrawn accounts and international money transfers. Just 15 per cent believe that bank fees are not too high for the services they use or penalties they incur.
In contrast, more than half (59 per cent) believe bank account fees are too high across all services, while 47 per cent thought missed credit card and missed loan payment fees are too high, and 36 per cent believe fees for overdrawn accounts are too high.
Older Australians are more likely to regard the fees charged by banks as too high. Nearly three quarters (70 per cent) of over-55s believe that bank account fees are generally too high, compared with 60 per cent of 35-54-year-olds and 44 per cent of under-35s.
Alon Rajic, Founder and Managing Director at Money Transfer Comparison, says: “When comparing traditional banking fees with the fees that competing fintech services provide, the level of dissatisfaction from the public is clear. Associated fees for services offered by both banks and fintech services can differ greatly.” For instance, annual credit card fees from banks from major banks can be as much as $295, with a high annual interest rate of almost 20 per cent,1 whereas some non-banks do not include annual fees on their card services and charge interest as low as 12 per cent. Interest rates on loans from banks are also significantly higher than alternative lenders – Commonwealth Bank can offer an up to 19.50 per cent fixed interest rate on car loans,2 while Loans.com.au, an alternative lender, offers a standard 6.69 per cent fixed rate on its car loan offering.3
International money transfers from a traditional bank can also incur a steeper fee for Australians, with majors banks such as NAB charging $30 when customers send money overseas through the app or internet banking platform,4 whereas alternative transfer companies such as TorFX don’t charge transfer fees or commission.5
2 in 3 customers would switch bankswith one service to cheaper specialist fintechs
Given the Australian public’s dissatisfaction with bank fees and charges, there is a growing appetite for moving some financial services to specialist fintech competitors. In its survey, Money Transfer Comparison presented respondents with seven financial services that they would be willing to move to specialist fintechs if they offered lower fees and were as safe as banks. Two in three (67 per cent) indicated they would switch at least one service to a fintech competitor.
More than a third (36 per cent) indicated they would outsource home loans, while 34 per cent would switch to a specialist fintech for their credit cards, and 32 per cent for their savings accounts or term deposits. Other services Australians would switch over included personal or car loans (chosen by 29 per cent of respondents), international money transfers (chosen by 25 per cent), share trading (19 per cent) and budgeting apps (19 per cent).
Alon says: “It is clear banking is another area in which Aussies are looking to cut costs. We could
see an increase in bank customers leaving in favour of innovative and specialist online financial service providers, many of which offer cheaper services than traditional banks – and particularly amid growing inflation and interest rates.
“With a significant proportion planning to switch over services such as money transfers, home loans and credit cards to alternative services, I encourage individuals to do their due diligence and compare service providers, to source the most cost-effective provider that is also suitable for their individual circumstances.”
The full survey results, including breakdowns across ages and States, can be found here.