Customers want trust, but do they also want brands?

by Rebecca Pike24 May 2018

While customer owned banks may have seen an uptick in customer interest lately, it can still be difficult for brokers to pitch their home loans to clients.

The Customer Owned Banking Association (COBA) has launched a campaign to encourage borrowers to look at using customer owned banks. The “Own Your Banking” campaign began out of a growing response of wanting to find a bank customers could trust.

With the traditional image of customer owned banks as “being a friendly corner bank”, it is no wonder customers may choose to bank with them.

However, Steve Mickenbecker, group executive, financial services, at Canstar, said that brokers may find resistance to take out a home loan with lesser known institutions.

He said, “One of the issues that brokers have is Canstar lists 4000 home loans on its website and brokers cannot manage 4000 loans. They don’t want to have a panel that’s huge.

“It doesn’t mean they can’t have some of the other options, but where they can run into a greater degree of difficulty is that they’ll have this problem of it’s an unknown name, will people necessarily feel comfortable going to an unknown name?

“Secondly, does it have a presence in the place where I live? I can imagine that sometimes selling the concept of a smaller player to one of the broker’s clients might just present that little extra degree of difficulty.

“But their products are still sound products, they’ve got some well-priced products and still have the features that you’d expect to have in a loan from one of the bigger players.

“I guess brokers want to be comfortable that they can get the loan through the credit process. You can negotiate and understand the credit policy for a dozen or even 20 institutions, but can you for another 20 or 30 on top of that, if you want to get some geographic diversity in the customer owned segment? I think that probably is something which would challenge brokers.

“Consumers, whether they bank with a customer owned bank or they bank with one of the big guys, still demand a lot of the same stuff, so it’s not as if customer owned banks can get away anymore with providing a second rate service providing they’re friendly, and they don’t do that.

“What they’re doing is providing the full suite of products, so there’s no reason for people to think that there are only four options to bank with.”

COBA’S CEO Michael Lawrence is encouraging consumers to look at the alternatives in Australian banking “that can be trusted to put them first”.

He said, “Own Your Banking is a direct response to our members telling us they’ve seen an uptick in customer interest and enquiries because people are shocked by stories they’ve been hearing in the Royal Commission.

“Our model is the only alternative that can claim it is solely customer focused because 100% of profits are used to benefit customers. This is what we’re communicating through the ‘Own your Banking’ campaign.

“Four million Australians already own their banking. They are customers of mutual banks, credit unions and building societies across Australia.”

 

Related stories:
Campaign tackles first time investors
Brokers best placed to explain LMI
Small banks with a big reputation