How to ditch your bank
DESPITE the horrifying revelations coming of the Banking Royal Commission, and a huge range of alternatives and new entrants, Australians are still generally more likely to get divorced than change their bank.
Is it because we have one of the strongest and safest banking systems in the world and we become complacent? Is it because our finances are so complicated and we're so entwined in our bank we think it's too hard, and couldn't be bothered, to look at alternatives and actually change?
It's probably a combination of reasons, but the stories coming out of the Banking Royal Commission are showing that it is worth undergoing an audit of our personal banking, assessing the alternatives and switching if necessary.
Yes, it will take a bit of effort but, get it right, the rewards could be significant.
So how do you find the right bank for you?
Assess and analyse your existing banking arrangements
For many of us, our banking arrangements have evolved over a number of years as our financial needs have changed. Different credit cards added, new loans taken on for various projects, insurance added, investments made.
What started out as maybe one savings account or loan, has now grown into a maze of financial products. Naturally, this has been a smart marketing tactic of the bank which has cross-sold products knowing the more embedded they are in your financial life, the harder it will be to leave.
And we get lazy. We know it's a complex relationship and just can't face the effort of assessing.
Start from the top down with a simple question … does my bank meet my financial needs. Are their services right for me, are they responsive to any problems, do they present proactive suggestions, do they understand my particular needs?
Answering these simple questions will give you a gut feel on how committed you are to change.
Cull unwanted accounts and products
How many accounts and products do you actually have … and need? We reckon you'll be stunned at what you find. All those dormant accounts just sitting there forgotten, the extra credit cards you've been offered in the past, the insurance cover that's now inappropriate, the investments that looked a good deal at the time but not so much now.
Cash in, close or exit those accounts which don't serve a purpose or fill a financial need. Most of them will, more than likely, be attracting unwanted fees which far outweigh any benefits.
Simplifying your banking to what you need is a critical foundation from which to drive change.
Compare your accounts with the market
This is the real nitty gritty of assessing whether your existing bank is either ripping you off or providing value for money.
Start with the comparison online websites such as www.canstar.com.au or www.finder.com.au and individually benchmark each account with their competition. Focus on the interest rate, the fees, returns, the services (features) that are linked in.
Most of these comparison sites have a best-in-breed award system in each category to highlight the best products. This will provide an indication of what the experts judge to be best.
As you work through the different categories of accounts, loans, cards, insurance and investment products, you'll soon start to get a feeling for whether your bank's products stack up. Plus, as financial providers start to consistently appear as category stars, which institutions are the best rated.
Ask for a better deal from your existing bank
After the assessment is complete, and you've realised your bank isn't doing the right thing by you with fees, returns and services, it's decision time. Armed with all the facts you know exactly what your banking position is.
Is the situation bad enough that it is worth your while to shift banks?
If the answer is yes, the first move should be to your existing bank. Knowledge is power. Calmly explain the situation and show the better offerings of competitors and ask what the bank is going to do about it.
They know that you know what you're talking about and they've been told by their head office that it is cheaper to keep an existing customer than find a new one. Invariably, when pushed, they usually try and match a competitor's offering if you're a good customer with a range of products with them.
Frankly, even though you're annoyed they've been ripping you off in the past, if you can get a better deal with an existing bank, and not have to move, it's usually less hassle to stay.
If they won't play ball … pull the plug. But not straight away.
Line up a new bank first before letting go of the old
We know you're just itching to recreate a movie scene and tell your bank to get nicked in a dramatic way … but take a deep breathe instead and visit the alternatives first. The last thing you want is to be left in limbo.
While, from your research, you've come up with a couple of alternatives you like, still take time to talk to savvy family, friends and colleagues for recommendations on who they use. They may have a good personal banker who will take you on.
Visit the alternatives and don't just talk about replacing the products you already have. Do they also have alternative solutions?
Service is important and so are the tools they have on offer. If you're a "bricks and mortar" banking customer are their branches and ATMs conveniently located? If you're a digital customer are their online banking platform and resources good.
You need to "feel" good about using a new bank as well as having great products.
Most importantly, do they want you as a customer. Some banks have strict criteria on the type of new customers they want and who to pour kindness on … make sure that's you.
Ask what they can do to close down existing accounts and transfer them. Some banks have quite sophisticated services which basically handle all the paperwork in closing down accounts and setting up new ones. It makes it so much easier.
Take the plunge
It's a big decision. But you've done the homework, and an alternative is keen to have you as a customer. You'll be in better products and returns will be so much better.
Make the decision. Walk. Show that you won't be pushed around and you're doing the best thing for you, the family and the future.
Once you get over the nerves, you'll be proud of yourself. Good job.
You're not one of those that just grumble about the banks. You've taken action.