The Problem with Banks

I have always had an aversion to banks. When I was young, in the late 80s and early 90s, banking in India was a nightmare. I actually hated going to the bank, but had to for a variety of reasons - when my parents took me along, and subsequently when I was a student studying away from home. It all changed when the first ATM machine came along. In 1997, I was working in Ahmedabad, and HDFC Bank had just one ATM in the entire city - 5 minutes from my work place. I opened an account there with the specific purpose of avoiding the crowds and officious 'babus' that I had come to loathe. HDFC subsequently proved to be quite the leader in introducing technology to banking, and became my preferred bank - I still bank with them in India.

In 2003, when I came to Australia, my first encounter with a bank here was with CBA in Burwood. I realised that personal banking needn't be a chore. No queues... ever! Fast and efficient staff... fantastic! As a result, it took me awhile to get onto Internet banking (vastly ironic, since I was studying Information Systems!) - I enjoyed immersing myself in the joys of receiving customer service.

That changed when I finished studying, and the 'student' tag was removed from my account. I had to now actually PAY the bank $6 a month (now its $4) to hold my money! Absolutely insane, I thought! For all of India's banks woes, at least they never charged you to hold your money. In fact, every personal transaction account also acts as a Savings account, and pays a decent interest rate.

Since then, banks have returned to become a pet peeve. I refuse to understand why I should be charged fees to have access to my money. What about the old "3-6-3" (borrow at 3%, lend at 6% (thus earning the 3% spread), be on the golf course by 3 pm) mantra? Shouldn't that cover all expenses, including golf clubs? And isn't ensuring access to ATMs, internet and telephone banking covered under the 21st century definition of "customer service"? Shouldn't the banks be spilling their guts to get my business? Since they aren't, am I supposed to feel 'privileged' that someone has condescended to hold my account?

In addition, I was subjected to a large dose of peanuttage from CBA last month. I was charged 3 x $30 for overdrawing on my limit (cashflow issues that always got sorted out 1 day too late on each occassion) + $25 at the end of the month for a weird fee + $2.something as interest. The strange thing is:
1. the money from the direct debits went to Commsec (i.e. CBA) and Save The Children (a charity I support)
2. I called CBA and was told that after the $90 in fees that went out over the period of a week, I wouldn't get slugged with any further charges or interest... and that's exactly what happened at the end of the month. When I called CBA back, I was told to go look at something in the PDS that apparently covered their a*se.

I've realised after a lot of thought and reading, that banking in Australia is oligopolistic as a result of a unique "Four Pillars" policy which prevents the top 4 banks from merging with one another. As a result, the big banks are inefficient behemoths - if the policy was scrapped, the fear is that as a result of the ensuing mergers jobs would be lost, which is always bad news for politicians. Because of this policy, bankers have their customers over a barrel; and given that Australia is only a 20 million person market spread over a massive continent, none of the big international banks are likely to have a serious crack at it. In this environment, banks collude with each other to screw the individual. You know its true when they stick their name on most of the tall buildings in your city - just to rub it in that they own you.

The situation is unlikely to change in the near future; and the only thing for me to do is to move my banking to where I see the best value (i.e. lowest transaction costs and minimum peanuttage).

Here is the result of a 30 minute study I did just now (criteria: no minimum balance, unlimited Net and ATM trasactions) on various transaction accounts in the market:

BANK -ACCOUNT NAME - LOWEST MAINTENANCE CHARGE (p.m.)

• NAB - Smart Direct - $3
• CBA - Streamline - $4
• WestPac - Westpac One - $5
• ANZ - ANZ Access Select - $2
• St George - Simply Freedom - $6
• SunCorp - Everyday Banking - $5
• Bank of Queensland - Reverse Charges - $4
• BankWest - Lite Transaction - $2.99
• Bendigo Bank - Ultimate Everyday - $2
• Citibank - Citibank Plus - $5
• AMP Banking - Transact - $8
  

Based on this study, its either ANZ or Bendigo. Now the question is: is it worth the hassle of opening a new bank account, changing my details with my employer, etc. to save $2 a month? There is also the 'known devil' factor in staying with CBA.