Where does your bank stand on the issues most important to you?
In 2011 as a big bank customer of nearly thirty years I applied for a home loan. I was lucky enough to begin the journey into home ownership and to buy my first home. It was a smooth experience. There were no hiccups and like many of us, I didn’t consider in great detail why I chose my bank for this incredibly significant purchase. Ethical banking didn’t factor into my decision. I didn’t know this at the time, but 80% of the home loan market today is held by the big four banks. In my case I had banked with them since primary school, I was also an employee of theirs and I’d established a degree of trust in them. So why would I change?
Fast forward seven years and the royal commission into misconduct in our banks and finance industry has revealed alarming behaviour by individuals and management across many well-known brands. The interests of many loyal customers have been overlooked leaving our trust in the industry compromised and any remaining loyalty hanging by a thread.
Conscious consumers hold power
Now more than ever in banking and finance, being a conscious consumer is incredibly powerful. To put into perspective just how powerful, over the life of the average home loan in Australia a borrower will pay their lender over $190,000 in interest! It’s is easy to check how much interest you pay your bank by checking the last few months’ transaction history. Once a month, around the first or last day, you will see the interest charged to the account. With so much of our hard-earned dollars being sent their way, it’s time we put our banks under the microscope to see how their values and ethics align with ours and whether we feel confident our money is in worthy hands.
How to make an ethical banking choice
Deciding whether your bank is a super hero or villain is not simple to define and it’s a personal choice. Here are some things you might want to consider:
- Are less favourable actions balanced out by charitable donations or strong policies in other areas?
- Do they take a clear stance against industries or businesses that impact negatively on our community and environment, or do they support and invest in them?
- Are they owned by another big bank with different values?
- Do they make final decisions about what that they stand for based on financial outcomes?
- Are they owned by their customers or shareholders?
- What are they doing (or not doing) to drive positive change in important issues like climate change, conservation, diversity and inclusion, community engagement, reconciliation, financial education?
There are some financial institutions who stand out from the pack. It may be a surprise that they are also some of the most competitively priced in the banking and home loan market. Ethical banking need not be expensive.
Do you know where your bank stands on the issues most important to you?
Our guest writer is Amy Beattie, founder of Good Green Home Loans. In the wake of the Banking Royal Commission, she provides insights into what you can ask your bank to make sure they’re doing the right thing.