Bank account ‘for life' suggested
Kiwibank chief executive Sam Knowles says bank customers be given accounts "for life" to make it easier to change providers.
Wednesday, September 2nd 2009, 10:09PM
by Paul McBeth
Knowles told the Opposition's banking inquiry that allowing people to keep the same bank account would make it much easier for them to switch their provider without having to change a raft of details that currently accompanies moving banks, much like the system where people can keep their mobile phone number but switch telecommunications provider.
Still, Knowles acknowledged the market was competitive as the banks tried to offer more attractive deals to lure customers away from their rivals. Kiwibank, as a challenger to the Australian banks that hold the majority of the market share, has to work harder to build its customer base, he said.
"There's space for us to offer better deals," with the big four focusing on maximising the return from their existing customers, he told the committee.
The New Zealand Banking Association told Good Returns the idea was a new one, but said competition among the banks in the mortgage and term deposit space was strong. It seemed unnecessary with most banks and financial institutions willing to accept the costs associated with changing provider, a spokesman said.
Knowles told the committee he did not think the Australian banks were rorting their customers. Wholesale funding was less expensive than it was last year, but the banks had different strategies and faced different stresses from the current environment, he said.
Simon Pellett of the Productive Economy Council told the committee monetary policy needed to be overhauled as it could not control the money supply in New Zealand.
The think-tank's analysis of the latest quarterly reports from the banks found that while bottom line profits had eased in the most recent period, top-line earnings from interest had continued to rise in the three months ended June 30.
The committee will continue hearing submissions today.
Paul is a staff writer for Good Returns based in Wellington.
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