The hassle of changing bank accounts has deterred Australians from switching, despite the introduction of a Federal initiative designed to make it easier.
The “tick ‘n flick” scheme, introduced in July 2014, was designed to allow customers to switch banks more easily. But latest data has shown that the move has had little impact on consumers.
Under the scheme, just 15,000 bank customers switched institutions over the 11-month period since it was rolled out. By comparison, when mobile phone number portability was introduced, close to 17 million people took advantage.
Calls for change
Last month, ING Direct made a submission to the Financial Systems Inquiry calling for the process to be simplified. It says a simpler process would help encourage customers to move institutions and drive up competition.
RateCity CEO, Alex Parsons, said one of the main problem lies in the Australian public’s lack of knowledge about the switch initiative.
“The “tick ‘n’ flick” scheme is a great initiative but it’s failed to achieve what it set out to do, simply because most people don’t know it exists,” he said.
But ING Direct CEO, Vaughn Richtor, said the new switching initiative is still too hard and he is campaigning to further simplify the process for consumers, with the aim to help positively stimulate competition in the marketplace.
“Quite simply, despite recent regulatory reforms, switching banks in Australia still requires just too much effort on behalf of the customer,” Richtor said.
“For competition to truly thrive, you need to have a situation where customers can freely choose between genuine alternatives in banking products and services.”
Richtor said that the benefits of simplifying this process further will be exponential.
“Banks would be forced to work harder to keep their customers – and that can only be a good thing from the customer’s perspective,” he added.
One country that has successfully rolled out a similar service is the United Kingdom.
In September last year, the UK introduced a free “current account switch service” and saw a 17 percent increase in switching from the previous year. The incentive offered allowed customers to use an account right up until the last nominated switch date. On that date, all the debits and credits were switched over to the new accounts and the old account was closed.