Mike's Minute: Banks - The perceived problem vs what's actually happening

With the news last week that a lot of people are changing banks as they re-finance their mortgages, we once again ask ourselves whether the problem we think we have is actually a problem.

We seem, at least in part in this country, to be caught up in the idea that if you are big and profitable there might be an issue.

Banks have taken heat for years, so much so that Governments past, and indeed this current one, are asking some fairly serious questions about the way they do business.

The rural sector is not short of an opinion on the way they are being treated.

But the recent Commerce Commission report into the sector tells us very clearly there isn't enough competition, despite the fact that there is no shortage of actual banks with which to do business.

Open banking has been touted as a good move forward and in theory it might well be. But the Australians will tell you it is hardly a game changer. Technically it's easier to swap banks. That's good, but do they? It seems no more than they have previously.

So the figures produced last week by the Reserve Bank are instructive because they are a real world example of banking in action.

At the moment the banks are busy offering deals, they want money out the door, they're cutting rates (multiple times so far), and that story isn't over.

As a result of the deals on offer people are shopping around, people are moving banks and people are taking the arrangement that best suits them.

That is what's called the market working.

Now, if you run a poll and ask whether people are happy or you're paying too much or would you like things to be cheaper, you will always get the predictable answer.

Even at supermarkets, as prices drop, people will tell you they aren't.

Once again I offer the rider that this is not a defence of banks, banking or big business. But it is an observation on the real world, based on real facts and real events.

So just how bad is the perceived problem vs what's actually happening?

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Episode Transcript

Speaker 1 (00:00):
Now, with the news last week that a lot of
people are changing banks as they refinance their mortgages, we
once again ask ourselves whether the problem we think we
have is actually a problem. We seem, at least than
part in this country to be caught up with the
idea that if you're one big and two profitable, there
might be an issue. Banks have taken heat, of course,
for years, so much so that the government's passed and

(00:20):
indeed this current one are asking some fairly serious questions
about the way they do business now. The rural sector
not short of an opinion on the way they're being
treated at the moment, but the recent Commerce Commission report
into the sector tells us very clearly there isn't enough competition,
despite the fact that there are in fact no shortage
of actual banks with which to do business. Open banking
has been touted as a good move forward, and in

(00:42):
theory might well be, but the Australians will tell you
it's hardly a game changer. Technically it's easier to swap banks,
good do they well? Seems no more than previously so.
The figures produced last week by the Reserve Bank are
instructive because they're a real world example of banking in action.
At the moment, the banks are busy offering deals. Of
course they want money out the door. They're cutting rates
multiple times so far. And that story, by the way,

(01:04):
isn't over. There are plenty more where that came from.
And as a result of the deal's on offer, people
are shopping around, people are moving, people are taking the
arrangement that best suits them. Now, that is what's called
the market working. Now, if you run a poll and
ask whether people are happy or you're paying too much,
we'd like things to be cheaper, you'll always get the
predictable answer. I mean even at supermarkets, as prices drop,

(01:26):
people will tell you they're not. Once again, I offer
the rider that this is not a defense of banks
or banking or big business, but it is an observation
of the real world based on real facts and real events.
So just how bad is the perceived problem versus what's
actually happening. For more from the Mic Asking Breakfast, listen
live to news talks that'd be from six am weekdays,

(01:47):
or follow the podcast on iHeartRadio.