How to judge a bank

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How you judge a bank is very much dependent on what it is you want from the bank.

If one is investing in the bank by buying shares on the Australian stock exchange then two major factors are relevant. The first is the profit that the bank earns and the second is the net assets that back the share price. It’s prospects of earning in the future will also be relevant to how its share pricing is judged.

But if one is wondering whether it is a good bank with which to put one’s banking business or from which to borrow, then the lower the profit earned by the bank the better it is likely to treat its customers.

Best Bank is Bendigo Community Bank

I deal with most major banks in Australia and the one I have found to be by far the best is Bendigo Bank and specifically its Community Bank which tends to share some of its profits with the local community. Customers can own a share in their bank and that is a good investment because it earns money and respect. The service I receive from Bendigo Bank is so far ahead of the service I receive from the big four banks, that it is impossible to really compare them.

When I walked into NAB a while back I realised that I was not very important to them. Staff turnover is so great that there is no continuity of capable people in the branch with which I could deal. I have seen alleged appalling behaviour by a nab broker that does not seem to worry the bank too much. Commonwealth still looks after customers very well and does not seem to lend customers into trouble as much as it did when banks were first deregulated. ANZ has been good at executive level, at dealing with bad conduct that has damaged customers, but its local branch was so hopeless to deal with that I just gave up and left. Trying to deal with ANZ credit cards over the phone today was just a nightmare. Its phone service is as bad as its in-branch service. Computers doing the job people should, in order to cut costs and services to maximise profits.

Westpac offers ridiculously low interest rates on term deposits to existing customers compared to new ones, so we give it a miss for clients who have banked with it for years. I don’t deal with it now either.

When I walk into the local Bendigo Community bank most of the tellers greet me by name. They told me years ago that their aim was to know each customer’s name by the third time the customer came into the bank.

The service from Bendigo is absolutely exceptional and I cannot fault it. When negotiating with its subsidiary Rural bank its negotiators were again light years ahead of the counterparts of the big four banks and treated the customers for whom I was negotiating with great respect and fairness.

Profit is important but so is caring for people

Today I read in the paper that the stock market was disappointed in Bendigo and Adelaide’s profit margins. As a person who has bought a very small number of Bendigo and Adelaide and Big Four bank shares, I was not in any way disappointed. In fact I was delighted, because I knew that the reason the bank had not produced the gigantic multi-billion-dollar profits of the big four was that it cares more about looking after customers, than it does about making money out of me. It does not pay its CEO $1m a month like some.

Competition is the key to the best banking service

People don’t ask me to advise them on which bank to bank with. When new clients come to me to find a bank loan I use our Loan Apps to contact every bank that I think will help the customer. Then the customer can negotiate with each bank that responds so that they get the very best loan that suits them and a banker with whom they are happy to work. It is better for everyone who is looking for a loan to ask every bank that is likely to be interested and then play one off against the other to end up with the very best loan. That is a system I developed in 1987 when banks were first deregulated and decided to put their profits a long way ahead of their customers. I remember one of the first people to use our Loan App system saved $300,000 in interest on their loan.

So, as with many things in life it is what one is seeking to gain that determines the criteria by which one should judge the various options. The fields in which I deal are banking and politics. In both, that system of judging is vitally important if one is looking for the best outcomes. Today many people choose the bank simply because they have been with it for years and it is not too bad. In exactly the same way many people vote for the same political party because they have been voting for it for years and it is not too bad.

In both cases I have seen that people get better results when they judge critically on actual past performance rather than tradition. Joining the Australian Voters Network puts most people into a winning position with banks and government due to the support they receive.

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