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Connexus : Issue 40
"And, providing we can [give] them a competitive value proposition, the next step is transition," says Ryan. Acknowledging that switching in the past has been a hassle -- "It has been time consuming, inconvenient, disruptive” – he is confdent the new rules should remove some of those barriers. "It'll be a good step forward in terms of making switching a more practical and realistic thing to pursue." Tick and ick July 1 marked the beginning of a new period of opportunity for the mutual sector to improve its market share, courtesy of a federal government initiative to make it easier for banking customers to switch institutions. Treasurer Wayne Swan has promoted the changes as a “tick and fick” ser vice that enables customers to sign forms authorising their new fnancial institution to do the hard work for them. That includes arranging the transfer of all automatic transactions linked to the customer's account while informing associated creditors and debtors about the new account details. Modelled on a Dutch system, it is one of the recommendations of the Fraser Review on account portability and means customers don't have to go into their 'old' bank to switch. Louise Petschler, chief executive of Abacus- Australian Mutuals, welcomes the reforms. "They will empower many Australian consumers who are dissatisfed with their bank and want to switch transaction accounts," she says. "These reforms have the potential to remove a perceived historical barrier to action. The administrative red tape or hassle of fronting up to your current banking provider is now over." The changes are an important step for the mutual sector and the banking industry more broadly. However, despite high customer satisfaction ratings for credit unions, building societies and mutual banks, Petschler says there is more to do. "The reforms will heighten competition and create better value across the board, so our customer- owned banks need to be ready for the challenge from our big bank competitors who are keen to expand their share of retail deposits." Research from business information group Roy Morgan suggests there is a mood for change among banking customers, with a new sur vey showing that almost 50 per cent would be prepared to dump their banks if red tape is eliminated, making it simpler to switch accounts. The sur vey, commissioned by Abacus, includes these fndings: • 21 per cent of banking customers are likely to change their main fnancial institution in the next 12 months, with the main reasons being uncompetitive interest rates (35 per cent) and high or unfair fees (30 per cent). • 49 per cent would be likely to dump their main fnancial institution in the next 12 months if their new institution could automatically handle the administration process of moving fnances, direct debits and scheduled payments. THERE ARE ABOUT 45,000 MARRIAGES A YEAR IN NSW These reforms have the potential to remove a perceived historical barrier to action. Louise Petschler, CEO, Abacus CoverStory 26 Connexus