One in four big bank customers have left or intend to leave after failure to pass on rate cuts

Roughly 70% of Australians do not trust the big banks, with half of that number losing confidence after their failure to pass on recent rate cuts, according to new research from comparison site Mozo. 

One in four big bank customers have left or intend to move to a non-four lender, equating to roughly 4.9 million Australians. 

“Australians are making it crystal clear that they are not impressed with the big banks, with 62% saying the big four are putting profits before customers,” said Kirsty Lamont, Mozo Director. 

“The days of bank profiteering are well and truly coming to an end with online and smaller banks offering ultra-competitive rates and minimal fees.

“Mozo’s latest research indicates that there could be a major shift in where Australians choose to do their banking.

“Online home loan lenders currently hold a paltry 6% of the population but the tide could be turning, with half of Australians saying they would consider making the move.” 

The biggest roadblock for online banks appears to be a lack of knowledge, with 38% of Australians saying they didn’t know enough to make the switch, while nearly one in four felt that an online lender offered no special incentives compared to a bank with a branch. 

Over 30% of Australians felt they needed to sit down with a mortgage expert to discuss their home loan.

“It’s understandable that Australians are exhibiting a level of trepidation regarding applying for a home loan online, given it may well be the largest sum of money they borrow in their life,” said Lamont.

“That said, an online lender can easily save you tens of thousands of dollars over the course of your loan as well as offering the same level of security as any major bank.

“Our research found that nearly 20% of big four customers felt their money was ‘secure’ with the big four.”

The big banks sluggish response to the flurry of rate cuts affected the trust of those aged 25-34 years old the most with one in four losing trust after the rate cuts.

They were also the age group most likely to move with 46% saying they intended to do so. One in five Australians surveyed admitted they didn’t know enough about the rate cuts to make an informed decision about their banks. 

When Australians were quizzed about the benefits of getting a home loan with an online lender instead of a traditional bank, lower interest rates were perceived to be the greatest benefit followed closely by lower fees, however, one in four Australians believe there was no advantage to opting for an online provider. 

“Only 19% of Australians believe that the big banks are doing what is necessary to stay afloat in the wake of the rate cuts, leaving a massive 80% unimpressed with big bank behaviour. The writing is on the wall for many borrowers and now is the time to find the most competitive rate on the market and reap the rewards,” says Lamont.