Banking Review

What if the Independents start calling the shots on banking?

OPINION

One of the more interesting side effects of the global financial crisis is the development of a number of new banks around the world. The phenomenon hasn’t quite stretched to Australia, where post GFC we are still left with less banks, thanks to industry consolidation.

Metro Bank launched in July in the UK, claiming to be the first new high street lender in more than 100 years. The bank says it has been so successful it may accelerate its branch opening plans.

In the US, Bank Simple is getting all the press as it makes big promises about its plans to shake up traditional banking.

In markets where the GFC is still being felt, politicians are scrambling to implement measures to combat concerns about reduced competition in banking.

Britain’s Coalition Government recently announced plans for a “Big Society Bank” – a bank funded by money left in dormant bank accounts – that will invest in charities, social enterprises and voluntary groups.

In the UK more than 400 million pounds is floating around unclaimed – for the money to be disbursed it must have been sitting dormant for more than 15 years, so 100 million pounds is heading to the Big Society Bank.

Unclaimed money in Australia, which includes money in dormant bank accounts, forgotten shares and life insurance payouts, is worth more than $560 million.

Perhaps some of that could be put to better use in Australia.

Banking is yet to feature heavily on the agendas of the independent senators calling the shots in our hung Parliament, but it’s likely it will get a run at some point.

Competition, switching and lending to small business are the issues to watch.

The hype generated by Bank Simple in the US, and the customers flocking to Metro Bank despite its rather uncompetitive pricing, suggest consumers and the media will jump on any seemingly new banking proposition.

Is it just a matter of time until we’re given the same opportunity?