01.Big four banks not the only option
- $166.4 billion – The amount Australians keep in transaction accounts with the Big Four that earn little to no interest.
- $7.16 billion – A conservative estimate of the amount we gift the Big Four by leaving additional funds in transaction accounts.
Australian banks use domestic deposits as an imperative part of their funding mix, especially when global markets are instable. While those with term deposits and high-interest savings accounts are compensated accordingly, if you have additional money in a transaction account then you’re gifting the banks free funding, which they can use to lend and earn interest.
The figures above are estimates, because recent funding ratios are not publically available. We’ve included transaction account deposits for the Big Four only, so the figures can only go up.
*Calculations based on official data from APRA and the RBA accurate to December 2011.
Fees still fill coffers
[Note: Transaction account data is for the Big Four only, and fees are based on 17 institutions.]
Each financial year, the RBA surveys 17 major financial institutions about their banking fees. The latest data from the 2010 financial year indicates banks received $4.24 billion in income from fees on everyday banking products. Considering competition in banking has driven a number of financial institutions to deliver fee-free everyday banking products, we think consumers are still paying too much.
There is some good news, penalty fees have been cut literally cut in half. Exception fee income fell from $1.29 billion in financial year 2009 to $652 million in financial year 2010. Housing loans earn the most in fees from households at $1.31 billion, credit cards follow closely at $1.26 billion and transaction accounts earn $1.19 billion despite there being many fee free products now available on the market.
Bank’s bottom line not the only story
Banks cry poor, and consumers want a fair go – it’s an age old story, but it can have a happy ending. We know Australia needs a healthy banking sector to support its already strong economy, but it’s time more consumers received a better deal.
While the banks are busy protecting their bottom line, The People’s Watchdog wants to deliver a different message – if you’re fed up with bad behaviour from your bank, it’s time to move your money.