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More and more of us are figuring out that loyalty doesn’t pay, especially when it comes to dealing with banks.

At least, that’s one conclusion to draw from recent signs that Australians are ever so gradually becoming more open to shopping around in financial services – just like we do with other purchases.

A willingness to be a disloyal consumer is vital for a competitive market – but consumers are notoriously reluctant to switch their bank accounts.

Changing banks is a hassle, after all. Many of us have multiple accounts with direct debits set up – and quite frankly – have better things to do with our time. This inertia, sometimes dubbed a “lazy tax,” works in favour of banks because it limits the pressure on them to compete on price.

Recently, however, there have been some tentative signs these attitudes may be changing.

Figures from financial researchers RFi show the proportion of people who intend to switch banks for their main transaction account have almost doubled since 2011, from 7 per cent to 12 per cent.

A KPMG survey earlier this year found younger people aged between 18 and 30 were less loyal bank customers.

This may be partly because of online banking, which makes it easier to compare rival offers and open up an account.

ING Direct chief executive Vaughn Richtor also argues there is a gradual cultural change occurring.

“If we go to a shop and we’re not happy with the service or the products we walk out the door and go somewhere else. I’m not sure that was the case in banking, but I think it is increasingly becoming the case,” he says.

To be sure, the numbers of people actually changing banks is still low.

RFi’s surveys point to a slight increase in the proportion of people who switch banks each year, from about 4 per cent to 6 per cent.

There has only been limited use of a government scheme allowing customers to change banks by filling out a single form. About 250 people a month are using the service, latest numbers show, which is less than when the scheme was opened three years ago.

That is a far cry from Britain, where a switching service that guaranteed people could change banks within seven days, has processed more than 1.7 million switches in less than two years.

But even though more could be done in Australia, the rise of online banking does appear to be encouraging customers to be more open to shopping around.

If the trend continues, it may even have a silver lining for the other customers who can’t be bothered shopping around.

Amid stiff competition in the home loan market, for instance, banks have been forced to work harder at keeping their existing customers happy, which may include offering them a good deal before they threaten to walk out the door.

If more of us are willing to be disloyal, it ups the pressure on banks to compete harder, which can only be good news for consumers.


Posted by Clancy Yeates – The Age on 14th July, 2015