Rich Switch

Sydney Morning Herald

Wednesday July 28, 2004

Vita Palestrant

Vita Palestrant reviews a new service to help you change banks.

What is it? ANZ's account switching service. Many consumers contemplate switching banks but inertia usually kicks in once they're faced with an array of paperwork, namely redirecting salary, direct debits and direct credits etc from the old to new accounts.

ANZ believes its online tool will increase competition and lift its own market share. Two years ago the bank launched two low-cost bank accounts: Access Advantage and Access Select. The former gives unlimited transactions (excluding non-ANZ ATMs) and a chequebook option for $5 a month. The latter has no monthly fee, six free electronic withdrawals, free internet transactions and a chequebook option.

How it works The online switching service streamlines the process for consumers with automatic letter generation. It helps them enter their relevant details and generates written advice to notify third parties of the switch.

Consumers enter their old and new bank account details, identify the regular payments set up on their old account and then click a button to generate letters notifying recipients of their new ANZ account details.

Brian Hartzer, the managing director of personal business at ANZ, says making account switching easier is an important step in freeing up the transaction banking market.

"Our online switching service is the first of its kind in Australia. It helps streamline what has been a time-consuming chore in changing banks. The service is part of our strategy to grow market share in personal banking by making ANZ easy to do business with."

What it costs The new online switching service is free and can be found at www.anz.com/switch

Pros "If it is inertia which is holding people back from changing accounts, then this is a useful way to help them into the right sort of product," says James Dick, a senior financial services analyst at research firm Cannex.

Cons Consumers must still visit their old bank to close down their old account as a number of financial institutions do not accept written authorisation. It's also up to consumers to identify all the institutions that need to be notified of the switch.

"ANZ don't actually enact any of the changes," warns Dick. "They prepare standard letters - you still have to sign and mail them yourself. The changeover is done when the companies you write to get around to it. You may, therefore, need to maintain two deposit accounts during the changeover period.

"The system also relies on third parties, so mistakes beyond ANZ's control are quite possible. You may also forget to tell ANZ about some payments, so the onus is on you to figure out what needs to be switched over."

Where it fits in Dick says the idea is used extensively by banks in the UK. The same idea is used for credit cards and mobile phones. "If this process results in reducing the inertia of switching accounts, then it will increase competition. It is yet to be seen just how much it does this," he says.

© 2004 Sydney Morning Herald

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