Google Scares Aussie Banks

mask.of.sanity writes "Google could be the biggest threat to Australia's big four banks because of the trust online users place in it and its ability to engage with customers, banking executives say. They told an audience from the finance sector that companies like Google and PayPal are more responsive and trusted than banks, and cited emerging technology with an emphasis on online applications as a means for the smaller credit unions to challenge the position of incumbent banks. It's welcome news for Australia's credit unions: the nation's banks have taken turns in being the first to lift interest rates above the official reserve bank rate, with others collectively following suit, leading some to speculate they are in collusion."

"Responsive and trusted"

[mr_mischief]

Perhaps there's some cause and effect going on there. Companies that are more responsive to customer demands and concerns are, in my experience, more trusted by the customers. Perhaps the banks have already figured out how to compete and just don't realize it yet because being competitive cuts into profit margins.

Australias net banking is actually damn good

[SpazmodeusG]

Australia's online banking systems are actually really good. Better than anything I've seen in the USA.

Now before any fellow Australians mod me down for saying that let me just say I've spent some time in the US. We really do have it good compared to what I've seen of their systems. In the US if you want to view the full history of your online banking you have to seriously pay a fee. Americans actually think it's normal to not be able to download the past years account transaction history with a few clicks without paying for it. You can't download PDFs or CSVs of an account via the online banking systems i used in the USA. Direct deposit to other accounts isn't nearly as easy as it is here either - I'm sure i'm not the only one who buys goods from Australian websites via Australian Direct Deposit rather than a credit card or paypal service.

Disclaimer: Most of my experience has been with Combank but i know the other Aussie banks are similar - the online banking systems here are pretty damn good. Now if only the home loan rates were a bit more reasonable here in Australia (currently pushing over 7% and rising).

Re:Physical access

[John Saffran]

There'll always be people who prefer walking into a building to do their banking, but for the rest it's entirely possible to have a non-physical bank.

To take the example of ING, they used to rely purely on online and phone banking (ie. no physical branches period) but have now added the post office network for physical needs and rely on other bank's ATMs for physical money withdrawal. Of course an online bank would need to have excellent reliability on their online systems and excellent customer service on their phone centres, but if you have both then what's the big deal?

Frankly, if a bank is untrustworthy it doesn't matter whether they're physical or purely virtual .. to follow-on from your example, there's nothing to stop a bricks-and-mortar bank from closing your account and giving you the run around, being able to walk into a branch won't change that one iota.

Raise Rates?

[ikkonoishi]

Is high interest bad? Doesn't that mean that they give higher returns on deposited money or is this just the interest on loans?

I can see that if the banks can raise the interest they charge on the money they loaned out alone that collusion would be a problem since otherwise the customers would just refinance with another bank with lower rates. If they all work together the customers don't have anywhere else to go, but I would think that if they all raised rates then unless there was some legislative block on credit union type places popping up to attract customers away that they would be limited by the chance of bank runs.

Different expectations

[dugeen]

People trust Google more (if indeed they do) because they expect less from them. Google's free services promise nothing (in a legal sense) but usually deliver an acceptable service; banks have definite legal obligations which they often fail to meet. If you have to deal with Google in an IRL sense (trying to get them to fulfil their data protection obligations, for example) you'll form a different impression - you might well prefer to be on the phone to a bank's Indian call centre, staffed by people who can't understand you and couldn't help you if they could.

Re:Australias net banking is actually damn good

[metrix007]

Nah. I'm Australian and have a current account with ANZ and CUA, and used to have an account with Suncorp. In the US I have been with BoA and Chase. I can have transaction history for any period I choose, for free, and if I go into a branch the fee might be $2 or so, same as in Aus.

The main area the US is behind almost every other country in is direct deposit. I can't easily send money to someone elses account. Most countries have some equivilant of our BSB/account number setup, but not the US. Hell, they still have to use checks for most stuff.

The other interesting thing is that when paying with a visa/mc debit or credit card....no one checks for id, I don't need to put in a pin nor sign anything. If you steal someones card then its free reign till its called in and cancelled. I find that interesting.

Re:"Responsive and trusted"

[drsmithy]

Never said there was anything unusual about it, in fact as we both pointed out it's quiet "usual".

I think you might be reading my comment with the wrong inflection. When I wrote it, I was trying to point out it's not unusual for banks to do this everywhere, not just Australia.

As I was trying to point out, this is how Australian banks like to rip people off. Not only do they take 2% of a transaction when it's completed in a foreign currency (we are one of the _few_ nations where this is done, let alone the norm) [...]

In what countries is this not normal (or any of the other fees you mention, for that matter) ?

Re:Physical access

[delinear]

You don't think that maybe the fees and charges are what helps to pay for the exceptional service? I suspect the reason most people have a miserable experience with banks, or any business for that matter, is because they value cheap over all else, and you pretty much get what you pay for (and let's face it, there's little to distinguish a bank until something goes wrong, so for most people they'll avoid the bank with the higher fees even though they might be glad of the higher level of service one day).

Re:Australias net banking is actually damn good

[Anonymous Coward]

Aussie in the US here,
There's an amazing amount of culture shock with things that you wouldn't even think would be done differently.

The reason why Direct Deposit is virtually unheard of in the US is because their banks are really lacking in account security.
So much so that all you need is the account number, because the banks assume that only the account holder knows the account number.
As such, no one gives out their account number, so direct deposit isn't plausible, and they look at you like you're insane if you suggest it.

Additionally, it's virtually impossible to stop banks in the US from giving out account information to family members.
Hell, you don't even need to be a family member. "Hi, I'm Joe's roommate and I just wanted to check his balance before I cash the rent cheque he gave me" works fine.

The trouble with non-bank banks

[Animats]

The problems with PayPal are well known. PayPal should be regulated as a bank in the US, so customers have recourse to banking regulators when PayPal is holding the customer's money against the customer's will.

Not that PayPal's competitors are better. WePay got press by putting a block of ice with money inside in front of the PayPal conference. But they have miserable customer terms [wepay.com], like PayPal:

• You may not transfer or assign any rights or obligations you have under this Agreement without WePay's prior written consent. WePay reserves the right to transfer or assign this Agreement or any right or obligation under this Agreement at any time. That's backwards, since they have your money, and you don't have their money.
• You agree that WePay, in its sole discretion, for any or no reason, and without penalty, may suspend or terminate your Account (or any part thereof) or your use of the WePay Services and remove and discard all or any part of your Account at any time. Discard your account? With your money in it? That's what they're saying. Banks have to immediately refund your money if they close your account.
• IN NO EVENT SHALL WEPAY, its EMPLOYEES OR SUPPLIERS BE LIABLE FOR LOST PROFITS OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH OUR WEBSITE, OUR SERVICES, OR THIS AGREEMENT (HOWEVER ARISING, INCLUDING NEGLIGENCE), UNLESS OTHERWISE REQUIRED BY LAW. Banks can't get away with that.
• WePay reserves the right to change, modify, add, or remove portions of this Agreement (each, a "change") at any time by posting notification to the WePay website or otherwise communicating the notification to you. That's out of line for a bank-like service.
• Any Claim between you and us shall be resolved, upon the election of either you or us, by binding arbitration. So you can't sue them. Banks have been in trouble for that, even for credit cards, where you owe them money. Remember, WePay is a depository institution - they hold your money. You never owe them money.

As for having a "brick and mortar" location, when I run WePay.com through SiteTruth, it reports the address of a house in San Jose [sitetruth.com]. That's the address they gave the U.S. Securities and Exchange Commission as their place of business.