With trust in short supply and the four walls of a royal commission closing in on Australia’s major banks, challenger brand Mebank is putting its faith in the Australian Bankers' Association to carry the day for the rest of the sector.
Among the non-majors, Mebank's successful rebranding and prescient public interactions - such as their recent “Have your smashed ‘avo and eat it too” campaign - suggests a connection to and understanding of, the day-to-day cultural context of their customers that would be the envy of all the majors.
However, even a genuine challenger to the big four stands to be swept up in the fury of a royal commission.
As a member of the parliamentary review, Labor’s Matt Thistlethwaite summarized public sentiment when he told AB+F why he will continue fighting for a royal commission.
“Because we know that it is the only thing that can deliver the systematic, structural and cultural change that the banking and financial services sector needs,” Thistlethwaite said.
However, watching from the sidelines, a Mebank spokesperson said that while there are “serious issues” the ABA had the solutions at hand to “lift standards” and “improve culture.”
A matter of trust
“There are very serious issues within the banking industry that have been causing broad public concern and loss of trust in banks and these need to be fixed quickly," the spokesperson added.
“While ME has not been responsible for any of these issues, we are supportive of initiatives the ABA is working on, which will help lift the standards and improve the culture inside other banks.”
Distancing itself, for example, from Westpac’s Brian Hartzer, who said banking was already overcoming the “trust gap”, Mebank is placing its remaining trust in the hands of the ABA.
Hartzer told the inquiry his bank worked hard to be trustworthy.
“That trust hasn’t always been achieved. And I described this as a trust gap. Since then Westpac and the overall banking industry have made good progress,” Hartzer said.
Somewhat unconvinced, Katy Gallagher, shadow minister for financial services, declared “these big bankers are not living in the real world”. According to Gallagher, “the only way” to ensure the banks are acting ethically is “to expose their behaviour in the media”.
Mebank which has, like the majority of the sector, copped criticism for issues like not passing on RBA rate cuts in their entirety, will be sucked down the same vortex should the major banks fail to prevent a public inquiry. Which is why the challenger brand has been vocal and proactive in addressing the issues that have stricken the sector.
In a letter to the Standing Committee, published ahead of the latest hearings, the bank highlighted a areas it believed the industry could easily and effectively reform.
On credit cards, the bank called for mandated comparison rates in a way similar to the mortgage industry, and for all banks to be required to "prominently advertise" them along with any other rates to ensure customers can clearly compare different credit cards.
Mebank has also been supportive of the suite of ABA initiatives, banking code and the April 2016 launch of the industry's ‘six point plan’.
“One of the ABA initiatives ME is particularly supportive of is the review into product sales commissions and product-based payments for bank staff or third parties selling bank products,” the Mebank spokesperson said.
“We believe these initiatives go to the heart of the cultural issues affecting other banks.”
Speaking last week in Canberra, outgoing ABA chief executive Steve Munchenburg, described the siege mentality that the continual threats of a royal commission have on the sector.
“There is no doubt - and I’ve said so publicly - that Labor’s calls for a Royal Commission have galvanized the industry,” Munchenburg said.
And while non-major lenders stand to lose and gain from the erosion of trust apparent in the performance of the big four, throwing in with the peak industry lobby group appears to be the best way forward.
“Overall, we believe the ABA changes will improve Australia’s banking system for the better,” the Mebank spokesperson added.