The big four Australian banks are about to be hauled before a Senate Investigative Committee to investigate claims that the $2 billion a year cut in interest rates is not being passed on to consumers. In particular, the high interest of credit card debt remains unchanged.
About the only people who love the banks are those lucky people who are their shareholders and perhaps our banking troubles resonate from a political decision taken and implemented back in 1991 - when the Hawke/Keating government decided that the government had no place in banking and hived off the Commonwealth bank by offering it to the public at just $ 5.40 a share. Have a look at how much those shares are worth today ?
Remember the days when just about every street corner in a major city had a bank branch ? One by one the plethora of banks that operated in those times became the victim of acquisitions and were merged into the operations of the big four, and we lost most of the "State " banks when they followed the example of this closing trend and went out of business.
The Commonwealth bank was the Sheriff of the banking world. It had to answer for it's policies to whatever government held power in Canberra and the rest of the banking world didn't dare move without getting the nod for any policy change. This Sheriff joined the bandit gang when it was privatised and that's when we saw a huge jump in fees and charges - and the banks began to report billion dollar profit margins.
We are now at the mercy of just four banking giants who have been forced to moderate ridiculous charges for paying a day late or similar minor errors, but still implement measures that gouge for what are really unsecured loans in the credit card sphere. They deliberately make it difficult to change banks by refusing to move periodic payments from one account to another.
It seems that we can learn from our Kiwi cousins across the Tasman. They too followed the Australian trend and murdered their competitive banking system by selling their government owned bank - and they too suffered similar consequences to the ones we are trying to fix. They are now in the process of reversing that trend - and at the same time saving an ailing government instrumentality.
New Zealand is turning it's Post Office system into a bank and this will be named the " Kiwi Bank ". Not only will this recreate a business flow for those post offices that are falling victim to reducing letter movement but will provide much needed competition - that the major banks will ignore at their peril !
It is noticeable that the Australian post office system is gradually opening it's scope to a wider service sector. It provides a welcome bill paying venue for those who distrust Internet banking, but until recently drawing cash from a bank account was limited to Commonwealth bank accounts only. Today, that has been widened - across the entire banking sector and many other government agency services can be processed at any post office.
The big four banks are still closing branches and intend to force their customers to adopt electronic banking, but that does not suit the entire population spectrum - and not necessarily just older people. Reinventing post offices into service centres that include banking makes good common sense - and it would provide the competition our bandit banks need to keep their avarice in check.
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