John MacDonald: When are the banks going to lift their game?

Adrian Orr. Champion of the people.  

Well, that might be going a bit too far. But the Reserve Bank Governor was speaking my language when he says that dropping the Official Cash Rate, like he did yesterday, is just the start and that the banks have to do their bit too. And I couldn’t agree more.  

He was having a dig at their profit margins. But for me generally, I don't give two hoots how much profits the banks make. Because profitable business are a good thing. Even profitable foreign-owned business.  

But where bank profits do seem obscene is when you consider the way they treat their customers. In particular, existing customers.  

They fall over themselves trying to get new customers, but if you're an existing bank customer - nah, you don't deserve any special treatment.  

Which is crazy, because everyone knows that generally it's easier to hold onto your current customers than get new ones through the door.  

Tell that to the banks, though.  

And, if you’ve got a mortgage with them —if you're an existing customer, like I am— it’s people like us who get ripped-off while the banks try desperately to get new people signed-up.  

Case in point: I don’t know how many times I’ve seen my bank of nearly 25 years running ads for loan rates for new customers way better than what I've been paying.  

And I go into a branch and say, “I've been with them for ages, can I get that same rate please?”

And every time, it’s been, “oh nah, that’s for new customers only”.

It’s like they think they've got you over a barrel. Which they have, because most of us don't do anything about it, do we?  

I know we make threats that we’re going to move to another bank, but I think the banks have done a very good job over the years of making us think that it costs too much to change banks.

And that’s what most of us end up doing.  

In my case, I walk out of the branch thinking all sort of things in my head, writing all sorts of letters in my head telling the bank where to go… but then, you know, suck it up and watch the new customers get the welcome mat at my expense.  

And it shouldn't be that way. If the banks were as really interested in being our partner in life and all that warm fuzzy nonsense they trot out, they wouldn't treat existing customers with such indifference.  

Which is why I think the Reserve Bank Governor is spot-on with his comments.  

To their credit, all the major banks did cut their interest rates after the announcement yesterday that the Official Cash Rate was going down.  

But again, not all customers benefit from that. If you’re on a floating mortgage - yep you’ll benefit. But if you’re on a fixed rate - no change until it’s up for renewal.  

So I’ll give them some credit, but I think the banks still have a long way to go.   

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Mornings podcast with John McDonald
from Newstalk.

Speaker 2 (00:11):
Z'b Adrian Orr. How about this, Adrian Orr, champion of
the people that might be going a bit too far,
But the Reserve Bank governor, he was speaking my language
when he was talking to Mike just after seven thirty
this morning to just about an hour and a half ago.
I suspect he was talking your language too when he

(00:34):
said that dropping the official cash rate like you did yesterday,
it's just the start. That's just a small piece in
the puzzle. And he said now the banks have to
do their bit as well, and I couldn't agree more.
He was having her to get their profit margins, which
I'll come back to, but for me, generally, I don't
I don't give two hoots how much profits the banks make,

(00:58):
because profitable businesses are good, even profitable foreign owned businesses
are good, because then they'll stick around. But this is
where I draw the line and why I was delighted
to hear Adrian Or talking the way he was this morning.
I draw the line when bank profits are obscene when

(01:22):
you consider the way they treat their customers. And I'm
talking in particular about existing customers when you will know
as well as me, they fall over themselves, don't. They
try to get new customers. But if you're an existing customer,
oh no, no, no, no, you don't deserve any special treatment.

(01:43):
Just pass every fortnight.

Speaker 3 (01:46):
Come on.

Speaker 2 (01:47):
That's the arrangement, which is crazy when you think about it,
because everybody knows that generally in business, it's easier to
hold on to your current customers than it is to
get new ones through the door. Tell that to the banks, though,
and I'm sure you've got stories of how your bank
makes you feel second best. I have too. But let's

(02:07):
go back to Adrian Or for a second and what
he had to say about the banks earlier.

Speaker 3 (02:12):
The banks need to do better. They need to look
at their own margins and chase and compete with or
customers much more vigorously. Their funding costs are being challenged
because you know, the official cash road is adding one
of the variables that go into what they have to

(02:34):
pay when they're borrowing money to on land. But the
margin is also sitting there at a very healthy levels.

Speaker 2 (02:41):
Very healthy, all right. And if you've got a mortgage
with a bank, if you're an existing customer, like I
am fruntloads of people on our boat. It's people like
us who get ripped off while the banks fall over
themselves trying to get new people signed up. Case and point.
You can tell me if you tell me your stories,

(03:01):
totally one of mine. I don't know how many times
I've seen the bank that we've had a mortgage with
nearly twenty five years, how many times I've seen them
running ads for loan rates for new customers, way better
than what we've been paying. And so I've gone into
the branch time and time again, and I'll say, oh,

(03:22):
I've been with you guys for ages, can I get
that rate that you're advertising place? And every time, every time,
every time, it's been ah, nah, no, no, no, no, no, no.
That's for new customers only, not mugs like you that
have been supporting us for twenty five years. It's like
they think they've got us over a barrel, isn't it,

(03:46):
which they have, and you know why they have because
most of us we don't do anything about it, do we.
And I know we make threats that we're going to
move to another bank, but I reckon the banks have
done a brilliant job over the years of convincing us
that it would cost too much to change banks, too complicated,
and it cost you too much. And that's what most

(04:09):
of us end up doing, don't we. In my case,
every time I've gone in to say, oh, you know,
can you can you match you rate your advertising? Every
time I've walked out of the branch thinking all sorts
of things in my head, drafting all sorts of letters
in my head telling the bank where to go. But
then you know, you go home, You suck it up,

(04:30):
and you watch the new customers get the welcome matt
at your expense, at my expense, at our expense. And
it shouldn't be that way, should it. Because if the
banks were as really interested in being a partner in
life and all of that and all the warm fuzzy
nonsense they tried out, if they were really walking the
talk on that, they wouldn't treat us customers with such indifference.

(04:54):
Which is why I think Reserve Bank Governor Adrian or
was spot on with his comments this morning, we'll be
a bit balanced, you'll we To their credit, all the
major banks did cut their interest rates after the announcement
yesterday that the official hash rate was going down, but
again not all customers benefit from that. If you're on
a floating more because sure you'll benefit straight away. But
if you're on a fixed rate like most people, no

(05:17):
change until it's up for renewal. So I'll give them
some credit for that, but I think I think the
banks still have a long way to go. Generally, I
don't begrudge them, they're big profits, but I do begrudge
them their big profits when they treat us like cash cars.
And as someone who has had a mortgage with the

(05:37):
same bank for twenty five years, that's when I feel
like I feel like I'm being treated like a cash car.

Speaker 1 (05:44):
For more from Category Mornings with John McDonald, listen live
to news talks It'd be christ Church from nine am weekdays,
or follow the podcast on iHeartRadio