A portable bank account. What’s next?

At Novo Super we’ve been commenting on portability in the SMSF sector since we first commenced operating in 2013. This is a view that appears to be shared by only a handful of innovative leaders in the full service administration space.

The reason? At Novo Super it is our belief that competition and personal service at the local level should be at the heart of the sector not expensive or complex software that effectively creates a barrier to exit and as a by product leads to systemic complacency.

Around 35 years ago an innovator by the name of Sony introduced a change in music listening habits by allowing people to carry recorded music with them and to listen to music through lightweight headphones. Sony sold over 400 million Walkman portable music players and in the process changed portability in the music industry forever.

On a more local level mobile phone number portability was introduced by regulation in 2001 and allows mobile users to move between carriers with the same phone number in a matter of hours.

It is now with interest that we read a 28 September article by Joanna Mather in The Australian Financial Review. The article reports that, “Bank chiefs appearing before a parliamentary inquiry will be asked about the prospect of portable bank accounts, which would drive competition by making it easier to switch institutions.

A report by Centre for International Finance and Regulation (CIFR) last year recommended that customers (be) able to keep their bank account number if they moved to a different bank, much like a mobile phone number. The idea, swiftly rejected at the time by banks as impractical and costly, is set to re-emerge when the chief executives of the big four appear before the House of Representatives Standing Committee on Economics next week.

An author of the CIFR report, Rob Nicholls, said the change created more vigorous competition among telcos, and would do the same in the banking sector.”

The big four banks have long held themselves out as innovators, customer centric, service focused and use internal catch cry’s such as, we put the customer at the centre of all we do to perpetuate this belief. Why then is there a reluctance to create portability and in effect create barriers to exit by maintaining the current regime of complexity?

“Labor MPs have said they will quiz the CEOs on a broad range of topics including mortgage rates, profits, rate rigging, financial planning, insurance, internal culture and conflicted remuneration.

Writing in The Australian Financial Review, Westpac chairman Lindsay Masted said the public debate about banks and banking practice was a vital one. But it was important to remember that the sector made an enormous contribution to the economy. “Whilst the conversations on conduct, remediation of poor behaviour, remuneration and related matters are important, they should not be the only conversations about banks,” he writes.

While the leaders head to Canberra for a grilling on past and current practices, we’ll continue to focus on the SMSF sector with a lens of innovation, competition and service and help push the portability message rather than worrying about defending our patch by making things difficult.


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