According to a survey conducted by the Bank for International Settlements Australia’s four major banks are the most profitable in the world, raising profound question marks over allegations that the slowdown in economic growth, and specifically that of consumer credit, has put pressure on bank’s ability to fund their operations. And, while the big four may have stuck closely together Westpac has shown signs of breaking away from the crowd by launching their pilot mobile phone payment system which could change the way that consumers pay for, and are charged for, their purchases.
The results of the survey bring to the fore the major banks’ decisions not to extend the Reserve Bank’s rate cuts to customers in respect of mortgages and personal loans and the public outrage that has been provoked. The survey found the Australian banks to have the biggest pre-tax profits in the world, equating to 1.19% of their total assets. Australia was followed by Canadian banks, with profit margins of 1% of asset value and the United States with 0.9%. The banks have recently come under fire for high interest rates attached to credit cards which sees Aussies paying more than any other country in the world to buy on credit and calls for more competition to introduce more competition into the market. We’ve compared credit cards on Bankwest.com.au/personal/ and came up with some good results, yet also with others that were daunting to say the least.
News of Westpac’s pilot mobile phone payment system may just shake competition between the banks up a little, especially when it comes to consumers being able to compare credit cards and the fees they are being charged for transactions and interest. And, while the news certainly is a national first, it certainly hasn’t come as a surprise, with many analysts having predicted the mobilisation of payment to be on the horizon for quite some time, especially given the success of the Smart phone market in the country. The move was also preceded by a number of organisations that have enabled consumers to load their credit cards onto their mobile phones in order to process payments.
The news is significant for Westpac, which claims to have 3.4-million digital customers, and 43% of them are already using their phones already to pay for their purchases. If it takes off it could signal the end of plastic and the end of the road for credit and debit cards. And, if recent research is anything to go by, the innovation has the potential to change the banking landscape down under within the next five years. Statistics from MasterCard reveal that the use of mobile phones to facilitate purchases is increasing all the time and phone payments will soon be considered the norm, especially if they can offer consumers some relief in banking and transaction fees.
It certainly will come in handy in a country where Smart phones have become so popular in such a short period of time and where consumers enjoy spending their hard-earned dollars, especially in light of the fact that Aussies spend about $70,000 on day to day expenses, which equates to a national spend of $642-billion every year. Household expenditure ranges from $1,044 to $1,536 per week, depending on location, but experts have suggested that consumers can whittle this amount down considerably if they cut back on indulgences and personal treats like take-away lunches, café-style cappuccinos and sweets and chocolates to perk them up. Purchases of this nature have been labelled as ‘money leaking’ on the part of the consumer and, given pressures to increase savings and contribute further to retirement, it certainly is an area where Aussies can look to spare themselves a substantial amount if amassed over the course of a year.