CUSTOMER service is an area where banks have traditionally fallen down says Challenge Bank CEO Tony Howarth.
CUSTOMER service is an area where banks have traditionally fallen down says Challenge Bank CEO Tony Howarth.
“As an industry, we still have a long way to go on this,” Mr Howarth said.
“One of the reasons we have a long way to go is because we have done a lousy job of explaining the situation in the past,” he said at a recent Bunbury Chamber of Commerce and Industry briefing.
“For a long time the public saw banking services as free – but the fact was they were never free.”
He said, in the past, the real cost of providing transaction services were subsidised with depositors being paid less than a fair rate of return and borrowers charged more for their loans.
“Although this was not equitable or fair, it was the accepted way,” Mr Howarth said.
Deregulation and increasing competition meant the situation had to change, he said. “As the old cross subsidised
system is unwound, banks are moving more towards a user pays system,” Mr Howarth said.
“Even today, cross subsidisation still exists with transaction fees still only covering approximately 50 per cent of transaction costs.
“What you will see in the future is that banks will continue to align transactional charges to more closely reflect the cost of providing transactional services.”
He said this would mean self-service electronic transactions would reduce in price while assisted services such as branch transactions would increase.
“The objective is to give the customer a real choice on how they bank, where they bank, when they bank and how much they pay,” Mr Howarth said.
“Will there be fewer bank branches? Yes, but like petrol
stations they will also be different.
“For example, we hear a lot of emotional comments about
community banking and country representation.
“Already today, using a solution combining technology and face-to-face banking, developed by Westpac, approximately 20 per cent of our branch network in WA consists of community-styled branches where we have joint ventured with local community organisations,” he said.
“Despite what you may hear and read, we see strategic advantages in maintaining a branch network that customers can afford to use.”
“As an industry, we still have a long way to go on this,” Mr Howarth said.
“One of the reasons we have a long way to go is because we have done a lousy job of explaining the situation in the past,” he said at a recent Bunbury Chamber of Commerce and Industry briefing.
“For a long time the public saw banking services as free – but the fact was they were never free.”
He said, in the past, the real cost of providing transaction services were subsidised with depositors being paid less than a fair rate of return and borrowers charged more for their loans.
“Although this was not equitable or fair, it was the accepted way,” Mr Howarth said.
Deregulation and increasing competition meant the situation had to change, he said. “As the old cross subsidised
system is unwound, banks are moving more towards a user pays system,” Mr Howarth said.
“Even today, cross subsidisation still exists with transaction fees still only covering approximately 50 per cent of transaction costs.
“What you will see in the future is that banks will continue to align transactional charges to more closely reflect the cost of providing transactional services.”
He said this would mean self-service electronic transactions would reduce in price while assisted services such as branch transactions would increase.
“The objective is to give the customer a real choice on how they bank, where they bank, when they bank and how much they pay,” Mr Howarth said.
“Will there be fewer bank branches? Yes, but like petrol
stations they will also be different.
“For example, we hear a lot of emotional comments about
community banking and country representation.
“Already today, using a solution combining technology and face-to-face banking, developed by Westpac, approximately 20 per cent of our branch network in WA consists of community-styled branches where we have joint ventured with local community organisations,” he said.
“Despite what you may hear and read, we see strategic advantages in maintaining a branch network that customers can afford to use.”
