George Frazis, head consumer bank, Westpac at the Sydney office 11th August 2017 Photo by Louise kennerley AFRWestpac is scrapping “outdated” charges on some transactions and capping account-keeping fees, as part of a bank-wide review in response to the erosion of public trust in banks.
The chief executive of the bank’s consumer arm, George Frazis, on Tuesday said the bank would remove rules that limited the number of free monthly transactions, which applied to some “old” accounts created before the rise of mobile banking.
After Westpac’s move, Commonwealth Bank and ANZ Bank said they would address the same issue, with both lenders moving customers out of accounts that included a limited number of “free” monthly transactions onto newer products.
The moves match a change that National Bank made some years ago to provide unlimited monthly transactions to customers. NAB has also not charged monthly account keeping fees since 2010.
Westpac is also capping monthly account-keeping fees for personal banking customers at $5 a month – compared with some accounts that charge as much as $15 a month.
The changes follow the major banks’ move last month to scrap ATM fees for customers of other banks, and it is being announced the day before Westpac chief executive Brian Hartzer appears before the federal government’s banking inquiry in Canberra.
The changes were announced by Mr Frazis in a speech in Sydney, in which he also acknowledged ‘s banks had lost the trust of many members of the community.
Mr Frazis said the changes would benefit 1.3 million customers, and were “just the start” of the lender’s attempt to boost simplicity and transparency.
He said the limits on transactions were included in some accounts that had been created before the rise of mobile banking, when consumers typically visited a branch once a week.
“Products like these are the banking equivalent of the horse-and-buggy. That’s why we’re taking away those old fees and limits,” he said at a Trans-Tasman Business Circle lunch in Sydney.
Westpac did not disclose how much revenue it would lose as a result of the changes, but Mr Frazis said “it is not an insignificant decision on our part”.
A CBA spokeswoman said the bank was migrating its customers who still faced a monthly transaction limit to accounts with unlimited transactions, a process expected to finish by early next year. Its maximum account keeping fee is $6.
Some ANZ Bank customers also have a limit on the number of free transactions they can make every month, and the bank is seeking to move these people onto accounts with unlimited transactions. Most of ANZ’s accounts have a $5 monthly fee, but it has one with a $6 fee and one with a $10 monthly fee.
A spokeswoman for comparison website Mozo, Kirsty Lamont, said more than half the accounts in its database did not charge an account-keeping fee, and it was not clear why Westpac, ANZ and CBA still included such charges.
“If their smaller competitors can afford to have accounts out there with no account keeping fees then why can’t these big banks do that?” she said.
Mr Frazis revealed the changes in a speech that also dealt with the technological upheaval rocking retail banking, in which he also noted Westpac’s stoush with Apple over access to the iPhone’s hardware for making payments.
Westpac, National Bank and Commonwealth Bank do not offer Apple Pay because of the dispute, but Mr Frazis said Wesptac expected to reach a deal with the tech giant “eventually.”
“I have actually no doubt at some stage we will come up with an agreement with Apple Pay for Westpac customers,” he said. NAB’s fully owned Bank of New Zealand this week started offering Apple Pay, but said this did not signal a change of approach in .
Mr Frazis also touched on what he called the “fractious relationship” between banks and the community, saying banks had become an “easy target” and it was “critical to confidence, investment and our international standing” that the industry improved its relationship with the government and regulators.
He explained the decline in public trust by saying banks had lost a “sincere connection” with their customers, which was fuelling resentment among some consumers, and action from the government.
“We lost that connection because some bankers and some banks forgot that trust is a two-way street,” he said.
“There has clearly been a divergence between our customers’ interests and the bank’s interests.”