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Connexus : Issue 38
The trends are among the most significant shifts identified in the Abacus-commissioned report, Trends in Retail Banking Fees. Fee-free everyday banking has become standard in the past three years, says Andrew Duncanson, Mozo’s research and insights director. “Most banks have moved to a space where at least one account – usually their leading product or account – has no account-keeping fee at all, or it has a very accessible fee waiver usually associated with depositing certain amounts, ” he says. The banks have also jettisoned limits on free ATM and EFTPOS withdrawals, structures that are still common in the mutual industry. In 2008, 29 per cent of the accounts the banks offered had a monthly limit or restriction on the number of free ATM or EFTPOS transactions allowed. It now applies to only 17 per cent, and only one product with limits has been launched in the past three years. The shift could potentially undermine what have traditionally been points of differentiation for mutuals: the ability to offer low fees and value, and put people before profit. The issue for mutuals is not so much whether their fee structures are competitive with the banks, says Tony Schesser, senior manager, research and advisory services, at Abacus. It’s how easy it is for members and potential members to identify that they are receiving a good deal. “It’s not that credit unions aren’t capable of providing good benefits and competitive fee structures to their members, but I suppose it does come down to there being ways they could present that in less complicated, more transparent ways,” says Schesser. Paying the customer Beyond the fee-free developments in transaction accounts, the banks seem to have learnt their lesson from the global financial crisis and have initiatives apparently designed to shore up their deposit base. Emerging trends include paying the customer instead of charging them. The move may be the beginning of a shift to competition for deposits through transaction accounts, says the Mozo report. HSBC’s Day to Day account is one example. It pays a $10 ‘feebate’ each month (for up to 10 months) to the customer if $2,000 is deposited. It has no monthly fee and no fee for own-network ATM withdrawals or EFTPOS. The battle for deposits also includes the launch of accounts such as St George’s Sense, which blends high interest with transaction capability. With fees for EFTPOS transactions also in a state of change thanks to the EPAL move to charge merchants, such trends have mutuals pondering how best to remain competitive with the connexus www.abacus.org.au 23 NEWS connexus www.abacus.org.au 23 Telling trends Key findings from the Mozo report Trends in Retail Banking Fees (available from Abacus Research on request): Transaction accounts – banks have either moved to no fees or non-complex fee waivers based on account balance. Savings accounts – a shift away from older-style cash management accounts to those that can be linked to other financial institutions. They have no balance conditions or fees, and higher-interest bonuses. Some have value-add strategies such as ATM-based rebates. Term deposits – banks have high fees for early withdrawal. Home loans – fee strategies have shown little change since 2008, with widespread use of low or no fees. The July 1 exit fee ban was yet to impact on fee structures. “It’s not that credit unions aren’t capable of providing good benefits and competitive fee structures to their members, but I suppose it does come down to there being ways they could present that in less complicated, more transparent ways”