OFF THE STREET
New breeds of community banks are getting customers out of queues and into high interest, says Todd Parker
Australians love to hate their banks. It’s a constant staple of talk-back radio; one of the most popular Aussie films of all time was a ludicrous piece of work about a bank that drives small businesses under and (it is implied) kills their children for sport; and who hasn’t seen a battered ute with a kelpie cross in the back and a bumper sticker reading, “Which bank? They’re all bastards!”
Of course, one of the golden rules of capitalism is that when the big guys aren’t able to get it done any more, smaller and more nimble competitors, using new technology, are able to step into the service gap, win over new customers, and make the old establishment institutions take notice. That sort of revolution is quietly taking place in Australia’s banking sector, where a new breed of entrepreneur is taking advantage of the widespread dissatisfaction created when the Australia’s big four banks closed local branches – in some cases leaving whole suburbs and towns without a physical branch office. One new banking network has, in partnership with local communities, set up over a hundred “community banks” across the country, and as part of that has pledged to plow money and profits back into local areas – something that the big banks, with their eyes on maximizing yield for shareholders, pay lip service to in principle but in practice are loathe to do.
But in the Internet age, there is no reason why one even needs to go into a physical branch to do one’s banking. Australia is more advanced than many other countries when it comes to electronic payments, and on-line banks are able to compete on both fees and interest rates by avoiding the expense of brick-and-mortar operations all together. One bank that is making great strides in this area is Community First Credit Union, which is powering a new online financial services operation called Easy Street Financial Services (http://www.easystreet.com.au). Based in Sydney, Easy Street has over $500 million in assets and some 57,000 members – and because it doesn’t need to pay dividends to shareholders, that means that it can offer higher rates of interest and better service.
The company’s EasySavings plan, for example, offers a 5.65% interest rate, 24/7 internet banking, and (unlike the big guys) no fixed terms, minimum deposit, or bank fees. In fact, the EasySavings account has been awarded “Best paying E-account” by Money magazine three years in a row.
Account holders can also take out personal loans up to $35,000 simply by applying online, with no application fee or early repayment penalties and convenient redraw facilities.
And for those looking to invest long term, or just have a little flutter on the share market, their EasyBroking service provides flat-fee $26 trades on the ASX and a full suite of on-line trading tools. So far, Easy Street’s business model seems to be working. Unlike big banks that have to entice customers with “bonus interest” schemes and other incentives to stay with them, Easy Street “feels loyalty is built by providing our customers with consistently good returns on their at call savings.
“What consumers will need to be aware of with a bonus interest offer is that at the conclusion, they could end up with an interest rate that is below what’s on offer in the marketplace”, says spokesperson Kerry McMorrow.
“We have found our funds to be sticky and enjoy a retention rate of approximately 95%”.