Why Don't Banks Entice Aussies to Switch Transaction Accounts?

greenslade on 13/08/2024 - 07:03

I've just been in the UK where banks will routinely offer 100-200 pounds (= 200 to 400 AUD) to entice customers to switch their current account (aka transaction account) from one provider to another. There are often other perks bundled in too. The Brits do current account churning the way Aussies do credit card churning! Coming back to Australia, I can't see anything similar. How come? Is there some legal reason?

A bit fed up with my transaction account - poor app - so I'm looking for a change, but now I'm expecting an Australian bank would pay me for the honour!

Financial Bank Account Transaction Account

Comments

  • recycledrevenge on 13/08/2024 - 07:33
    +1

    I quite often see promotions to switch for $50, but I can't find any at present.

  • ihbh on 13/08/2024 - 08:17
    +11

    Why Don't Banks Entice Aussies to Switch Transaction Accounts?

    Avoid an arms race where only the customer wins.

    • Shoocat on 13/08/2024 - 08:55
      +2

      And there's not as much profit for the banks, compared to products like credit cards, personal loans etc.

      They are only offering you points or other enticements for a credit card because they know they'll make much more than that out of your account.

      • freefall101 on 13/08/2024 - 11:32

        On the flip side, the brits tend to have more limitations in what they can charge in terms of credit card fees. As such, they have much worse offers in terms of credit card churning.

        Likely it's a stickiness thing too. I dunno how sticky customers are in the UK, whether having a bank account makes them more likely to take out a loan or credit card with the same company, but here I couldn't imagine doing that. There's no benefit to having a credit card, loan and transaction account through the same bank except to have a single app on my phone.

  • soan papdi on 13/08/2024 - 08:54
    +4

    I'd like to see BSB/Account portability, like phone numbers. BSB has outlived its purpose, so no need to have it tied to a bank now. For those who say PayID, it won't work with employers, medicare, etc.

    • JDMcarfan on 13/08/2024 - 10:09
      +2

      I agree BSB may have "outlived it purpose" but in reality, its a number that's tied to a physical location that cannot be changed. Think of it like a postcode for bank accounts. Your postcode these days are also functionally redundant as you can locate any address without it but it still exists.

      Your logic is sound but this can only be done with the account number. Perhaps they replace all BSB & Account No, with a new identifier that then can be transported.

      • soan papdi on 13/08/2024 - 10:24
        -2

        Your postcode these days are also functionally redundant as you can locate any address without it but it still exists.

        Incorrect comparison. Postcode is a part of the address and used in automated routing by auspost's machine readers. I didn't say we can stop using BSB, just that having it linked to a branch makes no sense because most of us open accounts online now, why tie it to a physical location? All ING accounts nationwide have 923100 as the BSB. So the easy peasy solution is for portable accounts all to have 999999 as the BSB, that gives us a namespace of 10^10 accounts (10 billion).

        • JDMcarfan on 13/08/2024 - 10:33
          +1

          Seems like we’re saying the same thing but choosing to disagree. The BSB is also used to route payments to first a bank then to an account number.
          999999 would not be possible as there’s no standards preventing duplication of account numbers between ADIs, and you’d be making it unnecessarily long.

          Although again I get your logic, the solution could perhaps get rid of the latter 3 numbers that relates to a branch number and merge the former 3 relating to the ADI.

          If you decide to move bank and keep accounts details then people could trace who you initially set up with (like mobile phone no).

    • Baysew on 13/08/2024 - 11:04

      For those who say PayID, it won't work with employers, medicare, etc.

      Would seem an obvious solution for PayID to work with employers, Medicare etc.

      • soan papdi on 13/08/2024 - 11:05

        You'd think so, good luck getting employers to upgrade their workflows and payment systems

    • psj2019 on 19/08/2024 - 16:42

      For private usage, I do like to use 'Beem'. Similar to PayID except it's connected to my account with multiple cards.

      Can pay my friends/families right away via a username and my preferred card. Find it a bit more convenient and simpler than PayID imo

  • JimmyF on 13/08/2024 - 08:56
    +6

    A bit fed up with my transaction account - poor app - so I'm looking for a change

    Your reward for changing is a better account/app experience.

  • askbargain on 13/08/2024 - 09:07
    +7

    wow why won't companies do something that isn't profitable

  • Jimothy Wongingtons on 13/08/2024 - 09:48

    upbank : lets do a referral promo where you invite and then split some bills/charges with friends to show how easy (AND FUN!!!!) it is to use the function for things like outings or dinners etc, its going to surely get us a lot of long term customers!

    ozbargain users: do the split functions with other members, move money back instantly, recycle as required, get the bonus/s , close account

    upbank: AYO

  • Jimothy Wongingtons on 13/08/2024 - 09:51
    +1

    serious answer though: i remember reading something (probably on reddit) - there is an arbitrary KPI the banks over there need to meet to show to the governing body they are 'stimulating competition' - otherwises there's no incentives to set up a new account if they are already happen with present bank.

    • greenslade on 13/08/2024 - 21:03
      -3

      Interesting, that sounds plausible. Obviously not much competition here in stagnant Australia.

  • Mulga Bill on 13/08/2024 - 09:51

    Some do try to do bundle deals for "stickiness"…if a customer has transaction account, credit card and home loan with same bank for example they are less likely switch banks.

    There was talks of trying to make account numbers portable but that's tricky - one reason alone is because not all banks use the same account number format. I know of one bank who's account numbers all end in the same 2 digits. It's not like a mobile number where they are basically all the same format.

  • jace88 on 13/08/2024 - 10:04
    +2

    Given most banks have eliminated or greatly reduced most of the fees whether it be ATM fees or monthly account keeping fees, there's not much money to be made in pure transaction accounts nowadays particularly since people don't tend to hold much balances there, and even those who do, have volatile balances which don't qualify for preferential liquidity treatment by the regulator. Unless they can upsell you into another more profitable product (whether it be sticky savings accounts or a lending product), there isn't really much incentive to have you as a pure transaction banking customer.

  • PissLUR on 13/08/2024 - 10:06

    It's mostly done through referrals now. ING. REVOLUT.

  • pharkurnell on 13/08/2024 - 10:09

    Customers are an inconvenience.. Customers expect cash, ATM's and Tellers … loans and business customers are where $ is at

    I've just been in the UK where banks will routinely offer 100-200 pounds (= 200 to 400 AUD) to entice customers to switch their current account (

    You dont honestly believe that they are giving it to customers out of the kindness of their hearts?

  • bigbadaboom on 13/08/2024 - 10:28

    That sort of competition only aids the customer. That's the same logic the bank oligopoly here used to rein in those home loan cashback offers for refinancing. With limited competitors (by design, thanks to, you guessed it - lobbying & corruption), they can control most things in the sector.

  • Baysew on 13/08/2024 - 10:50
    +1

    From a recent article about Open Banking.- The fight over $1.5 billion ‘game-changer’ that hasn’t lived up to the hype

    Indeed, it’s sometimes said Australians are more likely to leave their partner than their bank – a situation that dulls competition.

  • netjock on 13/08/2024 - 11:07
    -1

    It is because the UK is more competitive and a bigger market.

    Population 75m

    Banks 4 big ones with good list of competitors coming up (Lloyds + Halifax, Barclays, HSBC, Natwest (formerly RBS) followed by Santander, TSB, Nationwide)

    Also their banks have investment banking and institutional banking which diversifies profits, our big 4 is just building societies pretending to be banks

    Deeper markets, given London is a financial centre (not pretend like Sydney) there is a deep pool of capital which they can get access to. Only reason we got 2% home loans in 2020 was due to RBA opening a special facility. They had retail mortgage rates at 0.99% in late 2020 because banks have a liquid swap market.

    They have fee free bank accounts for ages and they use it as a loss leader to bring in other business (like selling insurance, premium bank accounts (travel insurance + tech insurance), credit cards).

    In Australia it is like they don't want your business. Know people who work at banks here and they are targeting mass affluent customers now. That was the kind of stuff they were talking about 10 years ago in London.

    Barclays in the UK is now giving free AppleTV subscription with their blue rewards account. Basically zero fee long as you deposit GBP800 per month and 2 direct debits LOL

  • try2bhelpful on 13/08/2024 - 11:27
    +3

    They are doing this with higher interest rate accounts. Having people jumping between accounts just gives them more overhead to open and close accounts. What does annoy me is why loyalty isn’t rewarded more. Surely having a reliable customer is more cost effective than dealing with the ones who jump around. Once you piss off an existing customer they are unlikely to come back

  • Cluster on 13/08/2024 - 14:38
    +4

    MeBank gave me $50 for joining to get a debit card and savings account. Hiver offered 5% cashback on debit card paywave purchases. HSBC gave me $50 for their 2% cash back debit card. I got $30 from BankSA for opening an account. Each time I had to open a savings account with them.

    Apart from HSBC, I just joined every bank solely for the offer and then never used them again. I'm probably the reason why banks generally don't offer bonuses for signing up.

    There is little profit in savings accounts. Banks want you to load up on debt and then be unable to pay in time.

  • greenslade on 13/08/2024 - 21:08

    Thanks folks, interesting discussion. Top insight for me: the big four are building societies pretending to be banks. That explains a lot about the economy. Reminds me of the Great Australian Scream - excellent piece https://medium.com/@matt_11659/the-great-australian-scream-d…

  • trankillity on 14/08/2024 - 08:16
    +3

    They do, they just do it for mortgage accounts (which are generally tied to transaction accounts). There's buttloads of money in mortgages, so incentivizing people to swap their mortgage over just makes business sense.

  • bamzero on 14/08/2024 - 09:52
    +1

    They used to but not much anymore.
    They used to pay interest for the privilege of us loaning them our money but now many of them don't/barely even do that and even charge us a fee not to.

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