Why switching banks to get a better deal is essential for the economy

Why switching banks to get a better deal is essential for the economy

Consumer inertia and a lack of banking competition is a vulnerable mix

Did you know that you are more likely to change your wife than your bank?

In our society we are more likely to shop around for the best deals in most things, however, we tend to stick with our bank. Even when there are thousands of dollars to be gained from better interest rates elsewhere, and despite knowing they are having a lend of us with fees, charges and interest rates.

Our reluctance to switch is being identified as a problem for our economy – which  prizes competition.

Australian governments and regulators have opted for stability over innovation in a Four Pillars policy, which prevents our four major banks from merging. It is effectively a government guarantee that entrenches four incumbents.

The stability helped Australia weather the global financial crisis (GFC) but the current concern centers around what this has cost consumers. The risk is that this comfortable foursome may be unprepared for emerging disruptive financial technology, just as taxi monopolies worldwide have been shaken to their core by Uber ride-sharing.

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