Australian banks are known for two things: eye-watering profits and optimistically overestimating their customers’ love and loyalty for them.
While Australians don’t change banks often, that’s not born out of love and loyalty. It’s just good ol’ fashioned inertia, and the fact our big four banks are corporate clones, and offer little by way of substantive differentiation.
They also fancy themselves as technological leaders despite barely having scratched the surface. One of the many glaring technological absences in Australian fintech is iPhone owners’ ability to use their phone as a tap-and-go pay device.
Some banks have released such a service for Android phones, but I understand their popularity is low, and use is limited.
Apple Pay, which revolutionised mobile tap-and-go payments in the US, and recently entered the UK market, has been struggling to set up in Australia.
The first obstacle was the ‘technological leadership’ of our finance industry, which is so great MasterCard Australia doesn’t even have a ‘tokenisation’ security feature in place and it is currently still scrambling to roll one out.
In the meantime Australia’s banks reportedly bunkered down in their negotiations with Apple because they are struggling so much financially, they bulked at Apple’s reported request of its usual 15¢ interchange fee on Apple Pay transactions.
The banks’ sole focus appears to be on their immediate profits, with little care-factor, if any, for long-term planning, customer convenience and needs, and offering the best available technology to all Australians.
You would think the billions of dollars we are generating in profits for Australia’s financial institutions would be enough to have our needs figure somewhere in this negotiation process – but, apparently no.
Admittedly, interchange fees in Australia are only about half of that in the US, on average 50¢ on a $100 transaction, compared with about $1 on a $100 in the US, and the Reserve Bank of Australia is trying to push interchange fees down further, to an average of 30¢ per $100 of transactions. This is likely to create further pressures in the negotiations between the Australian banks and Apple in how to share our money around.
The disruption to financial institutions has been fundamental and ongoing, and I also understand the concerns of our large banks, and their obligations to their shareholders. But technological disruption is not unique to the financial industry, it’s a global cross-industry phenomenon.
By consciously holding back sensible and proven new technologies that are convenient, wanted, and seen by customers as long overdue, Australian banks will not endear themselves with customers and, in the long-term, they will do only disservice to their investors.
If the banks don’t get on board, Australians will find workarounds. We always have. We are a creative bunch, just ask the television and movie industry. For example, some people are already using pre-paid American credit cards to use Apple Pay in Australia.
The banks really only have two choices: embrace progress and work with the fintech innovators to meet consumer demand – or be left behind …