Australians have to negotiate their way through a vast network of financial brands and services these days, which can be a major challenge.
It used to be easy to pick a bank. Head to the nearest corner, walk in to the bank and open an account. But those days have long gone.
Australian consumers are constantly reminded by financial experts to shop around for the best product at the best rate for our individual needs. It’s a massive job in itself.
According to the latest Roy Morgan Research, the Australian consumer financial services market has grown at ten times the rate of the population since 1997.
And while more competition means a better choice of tailored products for consumers, it also means a lot of confusion and headaches as we all try and work out what’s the best product and best value for us.
Superannuation and lending have been the principal drivers of growth, with super now the major financial category, equivalent to just under half the total market value of financial services. Lending grew by a whopping 324 per cent, according to Roy Morgan Research.
The over-50s are an increasingly dominant force, according to the report, comprising 39.5 per cent of the population 14+ and 55 per cent of the financial services market.
The Big 4 banks have increased their customers’ overall share of wallet, despite the 1997 inquiry predicting that new entrants and shifting market dynamics would result in more competitive conditions. However, customer loyalty among these players remains low.
The banking and finance market is undergoing continual mergers and acquisitions, making the situation even more complex. Technological advancements have also had a significant impact on the way customers engage with financial institutions.
The research found that there have been dramatic changes to the financial services industry since the 1997 Financial System Inquiry, which was compiled using 17 years’ worth of consumer-focused financial metrics and a detailed perspective on the dynamics of this complex market.
Roy Morgan also found that Australians now average around eight financial products across four different financial institutions, compared with seven products across three institutions at the time of the last Federal Financial System Inquiry in 1997.
But too many people are still complacent with their financial products and don’t shop around and switch often enough, according to spokesperson of financial comparison site finder.com.au, Michelle Hutchinson.
The site helps people compare credit cards or travelling overseas, or find home loans with certain features.
“Despite this free help and government reforms aimed at making it easier to switch, there’s still a lot to consider and the process can take some time, but it’s definitely worth the time it takes to compare, because consumers can literally save thousands of dollars,” Hutchinson says.
“We see about 400,000 Australians comparing their financial products each month, which is a drop in the ocean compared to the 23 million people in Australia. We have hundreds of financial products and know the huge differences in costs between them and see every day how much people save by comparing online and switching deals, so we encourage Australians to spend a little time each year reviewing their products and comparing deals to make sure they’re getting good value.”