Huge numbers of Kiwi customers don’t know who owns their bank, and it’s contributing to a multi-billion dollar profit for Australian-owned banks in New Zealand every year.
In 2018, Australian banks made a profit of over $5b in New Zealand. That’s $14m every day being taken out of our economy. Yet a new survey shows a huge number of Kiwis don’t even realise their bank is owned by the Aussies.
In fact, the survey commissioned by Kiwibank found that around 35% of BNZ customers thought their bank was owned locally. This hasn’t been true since 1992 when it was sold to the National Australia Bank.
But what does this actually mean for New Zealand? What would happen if these profits were kept here, and do consumers care?
Economics professor Tim Hazeldine of the University of Auckland says while it might be nice to think about the $5b profit staying in New Zealand, it won’t happen any time soon. He doesn’t think people really care where their money is, as long as it’s safe and the customer service is good.
“I’m a bit surprised that so many don’t realise that these banks are Australian-owned, but a heck of a lot do, and they don’t tend to care. I think it would be great if we kept more of the profits… It would come back more broadly to New Zealanders.”
Six out of 10 Australian banking customers surveyed said they were “more interested by the personal care and attention they receive from their bank than by who owns it”.
New Zealand’s biggest bank is ANZ, raking in almost $2b last year from Kiwi customers. Yet despite the A for Australia in its name, the survey showed that 25% of ANZ customers think their bank is New Zealand-owned. ANZ senior manager of external communications Stefan Herrick says people’s main concern is good service and the assurance that their money is safe.
“We think most people are more focused on products and services that meet their needs, ease of access to their finances, and having someone available to answer their queries quickly, than where a bank’s parent company is located.”
Government-owned Kiwibank made a net profit after tax of $108m in the year ending June 2019. Head of customer experience Anand Ranchord says this profit was invested in projects for New Zealanders, not all of which were related to banking.
“New Zealander of the Year is all about amplifying Kiwis who are making a difference in New Zealand and on the world stage, what we’re doing for our tamariki, educating the next generation on banking and skills. The promise with Kiwibank is that we’re actively investing in this through our partnerships.”
It might be Australian-owned, but ANZ spends $15m each year in New Zealand on sponsorships and donations, Herrick says. The bank currently sponsors NZ Cricket, the Silver Ferns, the NZ Olympic Committee, and the Cancer Society’s Daffodil Day.
The government does most of its banking with Westpac even though it owns Kiwibank, and Hazeldine thinks that’s telling consumers the locally owned bank might be less capable than its Australian rivals. “If the government took a lead and said ‘every year we’re going to move 5 or 10%, not a huge amount, from Westpac to Kiwibank or TSB’, then slowly but surely a huge amount of business would have been moved across to Kiwibank.”
Ranchord says he’s noticed a “much more engaged citizenry” in the last couple of years in the way consumers are making decisions, taking into account not only what is best for them but also for the planet and for other people. “We see that around sustainability and the environment and now more than ever customers are engaging in those issues, and not just at a passive level, they want to make sure the choices they make reflect their values and that reflects in their choice of banks.”
But the morals of consumers don’t seem to be translating into action over their banking habits. The survey noted only 27% of Australian banking customers in New Zealand would consider changing banks if they realised their profits were being off-shored. While that accounts for a huge number of people, it also means almost three quarters would not change for this reason.
“We’re trying to help educate the market that there is a difference and they’re not all the same, and I was surprised that that amount of customers thought their banks still had New Zealand ownership,” Ranchord says. “So I think that indicates the opportunity for us to help and to start a conversation and say this is important.”
Other customers in the survey say they care about the issue of ownership, but are interested in being well looked after. “When they have that epiphany that they aren’t banking with a Kiwi bank, we will be well-placed to help them,” Ranchord says.
But Hazeldine says if the $5b profit leaving New Zealand every year isn’t incentive enough for customers he’s not sure what will be.
“If people think giving $5b to the Aussies every year isn’t a big deal then I guess we get what we deserve.”
Subscribe to Rec Room a weekly newsletter delivering The Spinoff’s latest videos, podcasts and other recommendations straight to your inbox.