Dear Peter Mac.,

Are Australian banks good or bad?

I used to be with the Commonwealth Bank - but I found
them to be totally inflexible. I'm happy with Wespac.
However I find that credit unions are even better.
Especially for term deposits. They offer much better
deals, and are even more flexible. And they don't have
the service charges that banks do.

If you believe in unfettered capitalism, then banks can do no wrong. Their only responsibility is to the bottom line and hence to their shareholders. Captains of business preach the line "Our responsibility is to our shareholders." and at the same time claiming their businesses are 'good corporate citizens'. This would be fine if the objectives of business were always in harmony with the objectives of society in general. With the erosion of government enterprise capitalists are placed in a commanding position to dictate terms to society. Although it is interesting that banks were not unwilling, during the recent GFC, to accept a government guarantee of their businesses. Public intrusion into private enterprise is acceptable when its serves the interest of business, well so it seems. If you accept the notion of unfettered capitalism, then you should accept the notion of unfettered labour, a totally free labour market, where those in a dominant position can demand pay and conditions to what ever level they can achieve. This would result in an unjust and very much disordered society, something akin to nineteenth century England. That we do not need, what we all have is a responsibility too work for social and economic justice for all.

Before sounding off, it might be useful to ponder exactly what we "want" from our Banks.

Any thoughts?

We give them money to look after, from our salaries or from our business activities. They lend money, and earn interest on it. They provide a convenient means by which to pay our bills (when was the last time you had to write out a cheque?)

What else do you want them to do? Which part are they doing badly?

And given their position in your super fund, exactly how "lean" would you like them to run? Would you perhaps prefer them to make a loss? If not, how much lower should their profits be... half what they are now? A quarter? How about break-even - would you feel comfortable trusting your hard-earned to an organization that was treading a financial knife-edge?

Slagging off is all very cathartic. But it also helpful sometimes if we sat back and considered what we situation would prefer to exist. We could then make our complaints more specific and directional.

My biggest gripe about banks is that their people appear to be caricatures, complete with the "computer says... no" mentality. And they employ far too many of them, which causes massive inefficiency.

G'day Pericles
Before sounding off, it might be useful to ponder exactly what we "want" from our Banks.

Any thoughts?

(1) The keys to their vault.
(2) A big cash hand out.
(3) A job at their Monte Carlo office with cash for the casino.
(4) Pay and conditions equal to the CEO.
(5) An all expenses paid world cruse every time you make a deposit.
(6) A $1,000,000 no interest loan and pay it back only if you want to.
(7) A Xmas present.
(8) Shout a round at the pub.
(9) An ATM that spits out money without a card.
(10) A bank employee to bring you breakfast in bed.

May as well ask for those things as you have as much chance of getting them as anything else you might think you deserve. LOL.

*My biggest gripe about banks is that their people appear to be caricatures, complete with the "computer says... no" mentality*

That is an interesting one, Pericles and I can understand it from
your perspective, being a man of integrity and honesty. But if
you look at history, it was for instance before the GFC, where the
risk management people were outvoted and the market share people
within the banks, pushed on with low doc loans and low equity loans.

Banks deal with all sorts of people and as you know in business,
plenty are hardly that honest. So we saw a rapid rise in bad loan
write offs, as banks got caught, despite the risk management.
That dramatically affected earnings.

So personally I would rather have a CEO who is a bit more cautious
with handing out loans, then one who wants to win market share and
takes too many risks. Instructing underlings to get that right, would
no doubt produce the frustrating situation that you describe, but
with 30'000- 40'000 people working for some of the large banks, if
they arn't cautious, those people could also get it very wrong, at
huge expense.

What I think we need in Australia is more venture capital, where
equity investors can take a stake in new ventures for a share
of the equity and risk. America is a long way ahead of us there.

Some interesting perspectives and discussion.

Paul1405 – you seem to despise the fact that a business can exist to make money. Actually, the only reason a business does exist is to make money; if it doesn’t, it ceases to exist. I agree that there is a need for minimum standards set by a regulatory authority (which represents the will of the people through the government system and legislation) to cover labour conditions and business conduct and we have these in place. And your humour aside, you seem to have some feeling of entitlement that bugs me. It reminds me of the old Monty Python sketch – what have the Romans ever done for us?

In line with Pericles’s post, I think the banks provide a service to a market and that market (us) can choose to participate (through deposits, loads, etc) or not. Presumably enough people want to use these services. Lexi has suggested alternatives (eg credit unions) that have different cost structures and borrowing regimes and those choices are certainly available, or you can always keep your money in a sock under the bed of your rented house.

I guess the other think that bugs me is the way that many people blame the banks (can also substitute government, local council, boss, partner) for their financial woes, lumbago, skin cancer and liver cirrhosis. This is peddled well in the popular media. When did people stop taking responsibility for their own lives? When did the famous Aussie “can do” attitude get replaced with a culture of blame and an expectation of undeserved entitlement together with the associated whining that we used to make fun of in others? And why?