Fees For Banking Services Report 2013

Submission
Fees for Banking Services

2013 Report

Prepared by the Australian Bankers Association Inc.

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2013 Report
Contents
1. Overview ..........................................................................................................................................................9
2. Bank service fee revenue adjusted for asset growth............................................................................... 13
3. Bank service fee revenue and bank income and profits ......................................................................... 14
4. Households .................................................................................................................................................. 16
5. Housing loans .............................................................................................................................................. 21
6. Credit cards .................................................................................................................................................. 23
7. Transaction accounts - Households .......................................................................................................... 25
8. Businesses ................................................................................................................................................... 28
9. Exception fees .............................................................................................................................................. 33
10. Bank service fees and low-income earners .............................................................................................. 36
11. Financial services prices ............................................................................................................................ 38
12. Bank service points and improvements .................................................................................................... 39

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About the data
This report has been prepared by the Australian Bankers Association (ABA). It analyses data which is submitted
by banks for the annual Banking Fees survey. The same data are also collected by the Reserve Bank of Australia
(RBA). The survey has been conducted since 1997.
Survey reference period
The reference period for the collection of the survey data cover the 12 months to the end of June.
Global financial crisis
Readers should be aware that the data are affected by the ongoing effects of the global financial crisis (GFC). It is
widely recognised that the peak of the GFC occurred in September/October 2008. Following this, the ability of
businesses to access capital markets for their funding was severely constrained and many businesses returned to
banks for their funding. This resulted in a higher than usual increase in bank service fee revenue mainly from large
businesses.
International fees data
The RBA Banking Fees survey is unique from an international perspective. No other comparable economies (e.g.
UK, USA, NZ or Canada) conduct a similar survey.
Studies of banking fees which attempt to provide international comparisons are limited by the lack of detailed
statistics for countries other than Australia. These studies often rely on advertised fee rates and include broad
assumptions about the use of banking services. For example, fees associated with bundling/packaging of banking
services are difficult to incorporate in data models but are captured in the Reserve Bank survey.
Fees data gross basis
Bank service fee revenue statistics are gross measures and are collected on a pre-tax basis.
Impact of changes in transaction and loan volumes on fees
The statistics released by the RBA are not adjusted for changes in volume of banking business. For example,
while the survey results show that aggregate fees increased by a small amount this year, the survey does not
collect data to show how this relates to changes in banking business volumes such as numbers of customer
accounts, transaction volumes or loan volumes.
In this report, the ABA has produced a number of ratios which are based on a range of official statistics as released
by RBA, Australian Prudential Regulation Authority (APRA) and Australian Bureau of Statistics (ABS). Some of
these ratios enable an appreciation of how fees change as customer activity changes.
Coverage
Readers should note that the results from the RBA survey differ slightly from the ABA survey results contained in
this report. The RBA includes more institutions in their survey but the impact of these institutions is very small.
The survey results prior to 2001 have been affected by coverage changes. That is, over the early life of the survey,
new institutions were added to the survey or mergers took place with institutions which were not previously in the
survey. While these effects continue even in more recent years, the impact on the data was more significant prior
to 2001.
Readers should be aware that a change in coverage may cause only a small impact at the aggregate level but may
have a more significant effect at the product level. For example, if a bank purchases a home loan provider (which
was not already in the survey), this may have little effect at the aggregate fee level but it may have a noticeable
effect on bank service fee revenue received from home lending.

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ABS price measures for financial services
The Banking Fees survey aims to collect the amount of bank service fee revenue in dollars. It does not produce an
overall price measure for bank services.
The survey does not incorporate the broader income sources of banks, usage volumes or changing patterns of
consumer usage for bank services. The official measure which best captures this is produced by the Australian
Bureau of Statistics as part of the Consumer Price Index (CPI). This is covered in this report (see the section titled
Financial Services prices). The Banking Fees survey provides information on only one component of the income
and expenses of banks i.e. bank service fee revenue.
Exception fees
This is the fifth year for which data has been collected and released on exception fees.
Over 2010 and 2011, banks have made significant changes to a number of exception fees which is reflected in the
survey results (see Section 9 of this report).
Revisions
The Reserve Bank of Australia (RBA) seeks to improve the data where possible. Readers should note that data
were revised significantly in the 2011 report. In particular, data relating to fees from businesses lending and bank
bills were revised considerably. Some of these data series were revised back to the start of the survey (1997).
Revisions may also arise if the underlying benchmark data used to construct ratios has been revised.
Previous releases
Readers can refer to:
Fees for Banking Services 2012 Report, prepared by the Australian Bankers Association.
Weblink: http://www.bankers.asn.au/Media/Media-Releases/Media-Release-2012/Household-paying-less-for-
banking-fees

Weblink: www.bankers.asn.au/ArticleDocuments/163/FeesforBankingServicesReport-2011.pdf.aspx

Weblink: www.bankers.asn.au/Fees-for-Banking-Services-Report-2010

ABA has drawn upon the previous work done by Associate Professor Hawtrey in the general content and style of
this latest report.

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Summary comments

Bank service fee revenue collected over the 2012 survey was against a backdrop of solid economic conditions
even though the effects of the global financial crisis were still evident. Employment continued to rise,
unemployment was low, business investment was strong and so too were business profits.

Small increase in total bank service fee revenue with average fee growth at a record low
Over 2012, banks collected $11.3 billion in bank service fee revenue from businesses and households, a 4.2%
increase over the previous year.
Over the three years ending 2012, the average annual growth in total bank service fee revenue was 1.0% per
year, a record low. The three-year average has fallen sharply from a pace of 7.5% three years ago (2009).

The main driver of bank service fee revenue continues to be business volumes, not fee increases
Increasing bank business volumes are the main driver of bank fee revenue, not higher fees. This is evidenced by the
strong downward trend in the ratio of bank service fee revenue to banks resident assets since 2001.
Over the past five years, bank assets have been growing, on average, by 9.4% per year. This is 2.6 times faster
than the average growth in bank service fee revenue (3.6%) over the same time
This years survey shows that bank service fee revenue as a proportion of domestic assets was at a record low of
0.44%. In 2001 and 2002 it was 0.85%.

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Total fees from households at seven year low
Bank service fee revenue from households fell by $13 million or 0.3% to $4.05 billion this year (2012). This
is the lowest level in seven years (since 2005).

Large falls in bank service fee revenue from households compared with three years ago
Compared with three years ago, bank fees paid by households have fallen by $1.12 billion or 22%. In 2012,
bank service fee revenue from households fell by $13 million (0.3%), by $259 million (6.0%) in 2011 and by
a very large $850 million (16.4%) in 2010.

All six broad product categories for households have seen significant falls in bank service fee revenue
when compared with three years ago.
Transaction account fees fell by $808 million or 43%
Other account fees fell by $25 million or 33%
Housing loan fees fell by $163 million or 12%
Personal loan fees fell by $25 million or 7%
Credit cards fees fell $83 million or 6%
Other fees have fallen by $17 million or 15%.

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Fees as a proportion of household expenditure ... now at record low levels
The proportion of household spending
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on bank service fees fell to 0.51% in 2012, the lowest since 1999.
Over the four years, 2006-2009, it was in the range 0.74% to 0.77%.

Businesses ... average fee growth falls
Bank service fee revenue from businesses was $7.3 billion in 2012. This is a 6.9% or $473 million
increase over the previous year with 56% of the increase coming from large businesses and 44% from
small businesses.
Over the past five years large businesses have contributed 68% of the increase in fees from businesses.
Over this time average growth rate in fees paid by large businesses has been 13.6%. This compares with
an average 4.6% per year for small businesses, nearly three times lower than for large businesses.
On a three year average basis, growth in bank service fee revenue from business was 7.8% for the three
years ending 2012 falling over the past two years from 9.8%. Note that the low growth rates from 2004 to
2006 largely reflect the merchant fee reforms from 2004.
In the three years after the onset of the global financial crisis (2008, 2009 and 2010), bank service fee
revenue from businesses was growing, averaging 9.8% per year. During this time, businesses increasingly
turned to banks to support their financing needs as other markets tightened or closed entirely. This saw
aggregate fees on business lending increase by over 20% in 2009 and 2010.

1
Household final consumption expenditure (see ABS National Accounts)
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Large falls in bank fees on transactions accounts benefit households and businesses
This is the fourth consecutive year fees paid by households for their transactions accounts fell and the fifth
consecutive year in which bank service fee revenue has fallen for business deposit accounts.
At $1.05 billion in 2012, bank fees from transaction accounts is the lowest amount in 11 years, since 2001.
Over the past four years, fee revenue from household transaction accounts has fallen by $1.05 billion and
is now half of what it was in 2008.
Bank service fee revenue from household transaction accounts as a proportion of total household deposits
was at a record low of 0.19% in 2012.
Businesses have experienced a 25% or $212 million fall in fees on deposit accounts over the past five
years.

Lower income groups pay lower fees
The lowest three income quintiles contributed 14% each to the total duties, taxes and charges on financial
institution accounts over 2009-10. The two highest income quintiles paid double that (29%).
Over the six years between the two ABS household expenditure surveys, the percentage of weekly
spending on transaction accounts by the lowest income quintile has fallen from 0.34% (in 2003-04) to
0.28% (in 2009-10).

Exception fees ... stabilise after two years of large falls
A total of $654 million of exception fees were paid by households and businesses in 2012, a small increase
of 2.6% or $17 million over the previous year but still $836 million or 56% lower than three years ago.
Over the previous two years, 2010 and 2011, total exception fees fell by a very large $859 million or 58%.
For households, the fall was $743 million or 57% while for businesses it was $116 million or 59%.
For businesses, 84% of the fall in exception fees over 2010 and 2011 was to small businesses.
Exception fees represent only 0.8% of banks total operating income.

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1. Overview

Aggregate bank service fee revenue in 2012 was $11.3 billion. This is an increase of $460 million or 4.2% over the
previous year. This result follows a small rise of 0.3% in 2011. Before that, in 2010, the first fall in the history of
the survey was seen (a 1.4% fall).

Across the two broad customer segments this year, bank service fee revenue fell by 0.3% to $4.05 billion for
households, while for businesses it increased by 6.9% to $7.29 billion.

This is the third consecutive year that bank service fee revenue from households has fallen.

The small fall of $13 million this year in fees from households follows large falls over the previous two years which
totalled $1.1 billion.

At 6.9%, the growth rate for bank service fee revenue from businesses in 2012 is an increase on that for last year
(4.5%) but remains considerably lower than the 10.4% and 11.9% fee growth for businesses over 2009 and 2010,
a time which reflected increased bank intermediation as a result of the global financial crisis.

Table 1.1 Bank service fee revenue

2006 2007 2008 2009 2010 2011 2012
Households $4,181 $4,613 $5,092 $5,172 $4,323 $4,064 $4,052
. change $437 $433 $479 $80 -$849 -$259 -$13
. %change 11.7% 10.4% 10.4% 1.6% -16.4% -6.0% -0.3%

Business $4,661 $4,922 $5,274 $5,824 $6,520 $6,812 $7,285
. change $76 $261 $352 $550 $696 $292 $473
. %change 1.7% 5.6% 7.2% 10.4% 11.9% 4.5% 6.9%

Total $8,842 $9,535 $10,366 $10,996 $10,843 $10,876 $11,336
. change $513 $694 $831 $630 -$153 $33 $460
. %change 6.2% 7.8% 8.7% 6.1% -1.4% 0.3% 4.2%

Chart 1.1 - Bank service fee revenue

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Bank service fee revenue will normally grow if significant indicators of banking activity such as bank assets - which
primarily includes loans - grow.
At the end of June 2012, total resident assets of banks were $2.67 trillion. This was an increase of $187.6 billion or
7.5% over the previous year. This growth in resident assets is the strongest since mid-2009 a time when the rate
of growth in assets was falling at a fast rate.
Over financial year 2009-10 resident assets grew by only 1.2% and during the course of that year were even
negative.
Chart 1.2 shows that bank assets grew at a solid pace until the height of the global financial crisis in October 2008,
from which time asset growth sharply declined.
Readers should be aware of the series break in 2002 which has resulted in growth rates being inflated over that 12
month period.

Chart 1.2 Resident assets of banks

Source: Reserve Bank Bulletin Table B2.

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Usage of banks services responds to many of the same factors as for other services. In particular, if economic
activity is strong, this will more than likely translate into greater use of bank services.
A number of key economic drivers of banking business for both the household and business sectors were solid
over the 12 months ending June 2012, these include
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:

Employment employment growth moderated in 2011-12 after the high levels experienced in 2010-11. Total
employment at June 2012 was 11.5 million increasing by 500,000 over the prior two and a half years. The
unemployment rate was low over the financial year 2011-12 being in the range 5.0% to 5.3%.

Wages wages grew by 3.7% over the financial year 2011-12, above CPI (1.2%). This follows 3.8% for the
previous year, 2010-11 and a subdued annual wage growth in 2009-10 (3.1%).

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Data relating to each of the dot points was sourced from the Australian Bureau of Statistics.
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Immigration over the year ending June 2012 there were 158,950 permanent arrivals to Australia. On a
financial year basis, this is the highest result on record. (A record level of 163,310 was reached over the 12
months ending February 2009). The result this year continues the high level of permanent arrivals to Australia
seen since 2005.

Business profits business profit growth (gross operating surplus) is at a high of $376 billion over the year
ending June 2012. After falling by 2.8% over the financial year 2009-10, over the past two years business
profits have risen by $46 billion or 14.0%.

Business capital expenditure was at record high levels with a total of $154.8 billion being spent by
businesses over 2011-12 with growth rates at a very large 30%.

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2. Bank service fee revenue adjusted for asset growth

Growth in bank service fee revenue should be considered in the context of growth in banking business.
To illustrate this in very simple terms, if the number of home loans on the books of banks increases by 10% it might
be expected that the overall fee revenue for this banking service may increase by around 10%, simply because
there are more home loans to service. To adjust for this increase or volume effect, bank service fee revenue can
be measured against an indicative benchmark of banks business volumes such as resident assets to make better
comparison of the cost of banking over time. As such, the ratio measure bank fees as a proportion of banks
resident assets can assist in determining if fees growth is rising faster than asset growth.
Chart 2.1 shows that there has been a downward trend in the proportion of bank service fee revenue to total
resident assets over the past 11 years. In the early part of this decade, this ratio averaged around 0.85%. It is
now at a record low of 0.44%.

Chart 2.1 Ratio of bank service fee revenue to resident assets

Source: RBA Bulletin Table B2

The reason that this ratio has been falling is evident from the Table 2.1. That is, banks resident assets have been
growing at a faster rate than bank service fee revenue. Over the past five years, bank assets have been growing,
on average, by 9.4% per year. This is 2.6 times faster than the growth in bank service fee revenue, which
averaged 3.6% per year, over the same time.

Table 2.1 Bank service fee revenue and resident assets (%change)
% change over past year
Bank service fee Resident assets
2001 13.1% 9.5%
2002 10.5% 16.9%
2003 12.8% 12.4%
2004 2.7% 14.9%
2005 4.7% 10.1%
2006 6.2% 16.3%
2007 7.8% 17.6%
2008 8.7% 24.1%
2009 6.1% 10.4%
2010 -1.4% 1.2%
2011 0.3% 3.7%
2012 4.2% 7.5%

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3. Bank service fee revenue and bank income and profits

Bank service fee revenue as a proportion of banks operating income has stayed within a range of 13.5%-18.0%
since 2001.
Over 2011 and 2012, the ratio has been at the lower end of this narrow range (13.5% and 13.6%). For the ten
years from 2000 to 2009 this ratio was above 15%, falling below 15% in 2010 (14.0%).

Chart 3.1 Ratio of bank service fee revenue to operating income

Source: Banks operating income is sourced from banks annual reports.

The ratio of bank service fee revenue to bank profit is lower than the longer term average levels. In terms of net
profit before tax (NPBT), the ratio is now at 33.1%. For net profit after tax (NPAT), the ratio is 47.8%.
The increase in the ratio, over 2008 and 2009, was a result of a significant fall in profits. That is, bank profit over
this two year period fell by 25% on a before tax basis and 26% on an after tax basis. As such, the increase in the
ratio does not reflect a large rise in fee income; it reflects a large fall in profits.

Chart 3.2 Ratio of bank service fee revenue to bank profits

Source: Profit data are sourced from banks annual reports.

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The underlying profit outcomes used for Chart 3.2 above are shown in the chart below. In particular, the fall in
bank profits over 2008 and 2009 caused the ratio of bank fee revenue to profits to rise.

Chart 3.3 Bank profits

Source: Profit data are sourced from banks annual reports.

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4. Households

Over the past three consecutive years, bank service fees paid by households have fallen by a total of $1.12 billion
or 21.7%.
For the 2012 survey, bank service fee revenue from households was $4.05 billion, a fall of 0.3% or $13 million over
the previous year.

Chart 4.1 Bank service fee revenue from households: %change

This year, 2012, fees fell across three of the six major products categories for households. The biggest fall, in
dollar value terms, of $25 million or 2.3% was for fees relating to transaction accounts followed by a fall of $21
million in fees from housing loans.
The largest increase in fees from households this year was for credit cards which saw a small $19 million or 1.5%
increase over the year.

Chart 4.2 Change in bank service fee revenue paid by households by product

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The following chart shows the substantial falls in bank service fee revenue paid by households compared with
three years ago.
Compared with three years ago, all of the six broad product categories relating to households have experienced a
fall in bank service fee revenue. In particular, fees from transaction accounts have fallen by 43% or $808 billion
compared with three years ago (2009). The amount that customers pay in fees for housing loans is $163 million or
12% lower than three years ago and for credit cards, fees are $83 million or 6% less.

Chart 4.3 Change in bank service fee revenue paid by households by product

Contribution by households to total bank service fee revenue
In 2012, bank service fee revenue from households accounted for 35.7% of total bank service fee revenue, the
lowest share on record (since the first year of the survey - 1997).
Over the four years from 2006 to 2009, households accounted for 47% to 49% of bank service fee revenue.

Chart 4.4 Bank service fee revenue % from households

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Bank service fee revenue as a proportion of household spending
It is useful to compare bank service fee revenue from households with total household spending, using the ABS
National Accounts aggregate Household Final Consumption Expenditure (HFCE).
This year saw the fourth consecutive fall in the proportion of household expenditure on bank fees. That is, it fell
from 0.77% in 2008 to 0.51% in 2012. The current level of 0.51% is the lowest since 1999.

Chart 4.5 Bank service fee revenue from households as a % of HFCE

Source: ABS National Accounts - Household Final Consumption Expenditure.

Proportion of bank fees from lending to households
Over the 12 months ending June 2012, banks average outstanding loans to households (excluding securitisations)
were $1.17 trillion.
The proportion of bank service fee revenue from all bank lending to households, to aggregate bank lending to
households, conveniently summarises the relationship between these two items.
Over the past year (2012), bank service fee revenue from loans to households was only a small fraction (0.24%) of
total lending to households and is now at the lowest level since 1997 (the first year of the survey). This ratio was
in a tight range of 0.36% to 0.38% for seven years from 2002 to 2008.
Over the past five consecutive years, since 2008, the ratio has fallen from 0.38% to 0.24% now.

Chart 4.6 Bank service fee revenue from households as a proportion of loans

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Contribution by product to bank fees paid by households
In 2012, credit cards were the highest contributor to bank service fee revenue from households at 32%, followed by
housing loans at 30%.

Chart 4.7 Bank service fee revenue from households: %distribution

In 2012, bank service fee revenue from transaction accounts made up 26% of total bank fees from households, the
lowest on record.
Over the ten years from 1999 to 2008, fee revenue from transaction accounts was the highest contributor to bank
fees from households, ranging from 41% to 46% of total bank service fee revenue from households. This
contribution has fallen significantly, over the four consecutive years since 2008 to 26% this year as a result of major
changes to banks fee structures relating to transaction accounts. This has seen the value of these fees fall by 50%
or just over $1 billion, over the past four years.
The proportion of bank service fee revenue from credit cards and housing loans has grown considerably over
recent years. This has been a result of large falls in fees on transaction accounts, not by rises in fees for credit
cards and housing loans.

Chart 4.8 Contribution to bank service fee revenue from households by product

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Average Weekly Bank Fees Paid by Households
In 2012, there were 8.7 million households paying, on average, around $8.94 per week in bank fees. This is a fall
of 19 cents per week or 2% over the past year. This continues the fee reductions experienced by Australian
households over the past four years. That is, in 2008, the average weekly bank service fees paid by households
reached a high of $12.12, but have fallen by $3.17 or 26% since then.
The average weekly value of fees paid by households is now the lowest since 2004.

Chart 4.9 Average weekly bank fees paid by households

Average weekly fees on household transaction accounts
For households who only have a transaction account, the average weekly fees were $2.33 this year, the smallest
amount over the past decade. Average weekly fees paid on transaction accounts fell by 10 cents per week or 4%,
compared with last year.
Four years ago (2008), the average weekly fees paid by households on their transaction accounts reached a high
of $5.02 per week, Since then, it has fallen to less than half this amount, a fall of $2.69 per week or 54%, to $2.33
now.
Many customers have multiple transaction accounts, the data below have not been adjusted to account for this.

Chart 4.10 Average weekly bank fees paid by households on transaction accounts

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5. Housing loans

The most important asset owned by the majority of Australian households is their home. Banks play a significant
part in assisting households to purchase their own home, with housing loans making up 90% of all lending by
banks to households.
At the end of June 2012, there were around 5.6 million active home loans with banks, including owner-occupier and
investor home loans. The total value of lending for home loans on the books of Australian banks was just over $1
trillion.
Just over two-thirds (68%) of housing loans with banks are to owner-occupiers while the remaining 32% are for
housing investment. That is, banks provide 3.9 million loans to Australian households to purchase their own home
while there are 1.7 million housing investment loans which assist Australian households with their investment
strategies.
Banks continuously manage the huge volume of home loans and provide customers with a range of services
associated with their home loan.
These services include home loan service centres, call centres, relationship managers, provision of regular loan
statements to customers and providing advice to customers and conducting discharge processes for those who
have paid off their loan.
Customers who may be facing changes to their life circumstances such as job loss, illness or family breakdown -
or who may generally have difficulties in managing their loan repayments, are provided with services such as
assistance or options to try to manage any disruption to their repayments.
Not only do banks manage the large volume of home loans already on their loan books, they also process large
volumes of new loans each year.
Housing finance statistics from the Australian Bureau of Statistics (ABS) show that over the 12 months to the end
June 2012, there were 500,417 new housing loan commitments made by banks to owner-occupiers with a value of
$152 billion. Furthermore, ABA estimates that this rises to nearly 708,558 if investor loans are added.
The total value of housing loan approvals made by banks to owner-occupiers and investors was estimated to be
$227.5 billion over the 12 months ending June 2012.

Table 5.1 New housing loan commitments
Owner-occupiers Investment housing (est) Total (est)
Banks Loans Value ($bn) Loans Loans Loans Value ($bn)
2001 433,833 $58.9 152,472 $24.8 586,305 $83.7
2002 477,393 $74.6 195,750 $36.7 673,143 $111.3
2003 474,216 $83.9 239,015 $50.8 713,231 $134.7
2004 487,066 $97.9 254,783 $61.4 741,849 $159.3
2005 477,826 $104.3 216,922 $56.8 694,748 $161.1
2006 543,135 $121.9 229,369 $61.8 772,504 $183.7
2007 572,034 $134.6 238,393 $67.3 810,427 $201.9
2008 559,246 $143.5 249,443 $76.8 808,689 $220.3
2009 550,706 $154.3 214,338 $72.1 765,044 $226.4
2010 513,446 $154.9 219,601 $79.5 733,047 $234.4
2011 454,057 $143.1 194,263 $73.4 648,320 $216.5
2012 500,417 $151.8 208,141 $75.7 708,558 $227.5

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This is the second consecutive year in which bank fees from housing loans has fallen. Bank fees from housing
loans were $1.2 billion in 2012 which was $177 million or 12.7% less than two years ago. In fact, bank service fee
revenue from housing loans is at the lowest level in four years. The fall in bank service fee revenue has been as a
result of reductions or removal of a number of fees such as exit fees.

Chart 5.1 Housing loans: %change in bank service fee revenue

Banks service fee revenue from home loans can be understood better by summarising it as a proportion of the total
value of home loans on the books of banks.
The value of bank service fee revenue from home loans, as a proportion of average home loan outstandings, is
now at the lowest level on record. The total value of bank service fee revenue collected from housing loans is
much less than 1% (0.11%) of the total value of housing loans being managed by banks.

Chart 5.2 Housing loans: bank service fee revenue to loans on book

Source: Value of home loans is sourced from RBA Bulletin Table D5.

Note on survey data: Housing loan break costs
The larger increase in fees paid by households on housing loans in 2009 includes the impact of break costs on
fixed loans. Break costs apply when a customer exits a fixed term home loan before that fixed term ends. ABA
does not agree that these costs should be defined as fees as break costs are a market related cost and are
calculated on the basis of the original interest rate, the prevailing market interest rates and the length of loan
remaining. It is also important to note that some customers who decide to pay-out their fixed loan (and hence incur
a break cost) have decided to do so as it is to their financial advantage to do so.
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6. Credit cards

Bank service fee revenue from credit cards was $1.3 billion in 2012, increasing by $19 million or 1.5%. As Chart
6.1 shows, results for the last three years remain below the high of $1.4 billion reached in 2009.
Six years ago, in 2006, banks service fee revenue from credit cards was growing at 21%. Over the following two
years, 2007and 2008, the growth rate was just under half that at 10% in 2007 and 11% in 2008. In 2010, credit
cards fees fell by a large $151 million or 11%. This was the first fall on record.

Chart 6.1 Bank service fee revenue from credit cards

Data from the Reserve Bank of Australia show that credit card activity is a very high volume bank service channel.
At the end of June 2012, there were 15.0 million credit and charge card accounts in Australia. It is estimated that
banks are the issuer for around 80% of these accounts.
Over the 12 months ending June 2012, there was a net increase of 160,000 credit card accounts with application
volumes being up to three times this amount.
Over the same period, consumers made 1.71 billion credit card transactions with a value of $255 billion. This was
a 5.4% increase in the number of transactions (87 million more than the previous year) and a 4.4% or $10.3 billion
increase in the value of transactions.
In addition there are hundreds of millions of repayment transactions which are made each year.

Table 6.1 Summary of credit card activity (annual)
Accounts Cash advances Purchases Total
Number Value Number Value Number Value
m million $bn million $bn million $bn
Jun-02 10.3 36.5 $10.2 843.8 $98.3 880.3 $108.5
Jun-03 10.5 35.6 $10.3 989.2 $123.5 1,024.8 $133.7
Jun-04 11.2 35.8 $10.7 1,083.2 $138.8 1,119.0 $149.5
Jun-05 12.0 36.8 $11.2 1,156.9 $152.5 1,193.7 $163.7
Jun-06 13.0 38.2 $12.2 1,238.1 $166.2 1,276.3 $178.4
Jun-07 13.5 37.5 $12.5 1,304.3 $181.5 1,341.8 $194.0
Jun-08 14.0 35.7 $12.8 1,391.5 $201.3 1,427.1 $214.1
Jun-09 14.3 32.1 $12.2 1,438.5 $209.0 1,470.6 $221.2
Jun-10 14.6 28.8 $11.3 1,528.5 $221.8 1,557.2 $233.0
Jun-11 14.9 27.1 $10.6 1,622.9 $235.2 1,650.0 $245.8
Jun-12 15.0 25.4 $9.9 1,711.1 $245.5 1,736.5 $255.4
Source: Calculated from Reserve Bank Bulletin Table C01

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Chart 6.2 Credit cards: growth rates

At 3.20% in 2012, credit card fees as a proportion of balance outstanding are at the lowest level since 2003.

Chart 6.3 Credit card fees as % of balance outstanding

Source: Credit card balances were sourced from APRA Monthly Banking Statistics.

Another way to view this is to consider fees paid as a proportion of total value of credit accessed using credit cards.
In 2012, a total of $255 billion was spent on credit cards while the fees paid were $1.3 billion, giving a proportion of
0.51%, the lowest since 2004.
Chart 6.4 Credit card fees as % of value of transactions

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7. Transaction accounts - Households
For the vast majority of bank customers, their most regular experience with banking is through their personal
account that is, their transaction account which is used for day-to-day transactions or their investment account,
generally used for savings.
These personal accounts can be accessed over-the-counter at a bank branch, through telephone banking, at an
ATM, at a retail or service outlet, through direct credit or direct debit or via the Internet. This gives customers
access to their accounts 24/7 and in fact, most customers use a combination of these service methods, depending
on their needs and/or convenience.
The volume of transactions being processed through these channels every day, around the clock, is huge. The
table below presents a summary of payments statistics based on RBA data.
Over past year, there were 1.74 billion credit card transactions, 834 million ATM transactions, 2.8 billion EFTPOS
transactions, 241 million cheques issued and processed and 2.7 billion direct entry payments.
Internet banking usage was around 3.9 billion in terms of the number of value and non-value transactions in 2012.

Table 7.1 Summary of selected payment statistics (financial year basis)
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Credit cards
Accounts (million) 12.0 13.0 13.7 14.0 14.3 14.6 14.9 15.0
. Number (billion) 1.19 1.28 1.35 1.43 1.47 1.56 1.65 1.74
. Value ($billion) $163.7 $178.4 $196.0 $214.1 $221.2 $233.0 $245.0 $255.8

ATMs
. Number (million) 774.7 805.5 827.5 851.2 861.7 829.6 830.8 834.1
. Value ($billion) $131.0 $136.9 $142.0 $147.5 $152.9 $149.5 $149.7 $151.0

EFTPOS
. Number (billion) 1.15 1.29 1.42 1.63 1.87 2.12 2.45 2.81
. Value (billion) $78.2 $88.4 $97.9 $112.5 $129.9 $142.9 $160.0 $178.5

Cheques
. Number (million) 506.5 466.9 436.8 394.5 351.4 310.6 274.6 241.0
. Value (trillion) $1.68 $1.68 $1.77 $1.77 $1.50 $1.50 $1.35 $1.24

Direct entry
. Number (billion) 1.66 1.77 1.90 2.08 2.22 2.38 2.54 2.66
. Value (trillion) $7.9 $9.0 $10.3 $11.7 $12.0 $11.4 $12.1 $13.3
Source: Reserve Bank of Australia Bulletin Tables C4 and C5. While the statistics include banks, building societies, credit unions and some other financial
institutions, banks would make up the greater proportion of the data for each category. Transactions statistics presented above relate to those conducted by both
persons and businesses. It will be assumed that the proportion of transactions between these two segments remains reasonably stable across the years.

In 2012, bank fees paid by households on their transaction accounts was $1.05 billion, a fall of 2.3% or $25 million
over the past year and the lowest level in 11 years.
This is the fourth consecutive year of falls in the amount of fees paid by households for their transactions accounts.
Over the past four years, fee revenue from transaction accounts has fallen by $1.05 billion or 50%.
The large falls in bank service fees revenue from transaction accounts has been seen across all sub-categories of
transaction account fees i.e. account keeping fees, transaction fees, and other fees (including exception fees).

Chart 7.1 Bank service fee revenue from transaction accounts (%change)
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Bank fees paid by households on their transaction accounts makes up only a small proportion of total bank income.
In 2012, this was at a low of 1.3%. In 2008, it was 2.5 times this level at 3.3%.

Chart 7.2 Bank service fee revenue from transaction accounts as a % of bank income

Over 2012, it is estimated that transaction volumes increased by around 8% while fees on transaction accounts fell
by 2.3%. More so, over the past four years, fees on transaction accounts have fallen by 50% while transaction
volumes have increased by 34% over that time.
That is, the unit cost of transaction banking is falling at a very fast rate.

Chart 7.3 Growth in number of transactions

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Another way to consider the data is to measure bank service fee revenue from household transaction accounts as
a proportion of total deposits of households held with banks. .
Bank service fee revenue from household transaction accounts was at a record low of 0.19% of total household
deposits this year (2012). For the seven years from 2002 to 2008 this ratio averaged 0.6% or above.

Chart 7.4 Bank fees on transaction accounts as a % of household deposits

Source: APRA monthly bank statistics for data on household deposits with banks.
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8. Businesses

Over 2012, bank service fee revenue from businesses was $7.3 billion. This is a 6.9% or $473 million increase
over the previous year.
Bank service fee income from businesses accounted for 64.3% of all bank service fee income over the past year
(2012). Households accounted for 35.7% of bank service fee revenue.
The 64.3% contribution from businesses is the highest contribution since the first year of the survey (1997).
Small businesses accounted for 52.4% of bank service fee revenue from businesses in 2012, down significantly
from 63%-65% in the early years of the survey (prior to 2001). Correspondingly, the contribution from large
businesses has increased from 35%-37% prior to 2001 and has been between 47%-48% over the most recent
three years.
The very large number of small businesses, around 2 million, in comparison to 90,000 medium and large
businesses, is one factor that causes fees paid by small businesses to exceed that of large businesses. For
example, small businesses pay 2.5 times the amount of fees on deposit accounts than large businesses. A similar
result occurs for merchant fees where small businesses pay 2.4 times the level of fees when compared with large
businesses.
Over the three years prior to the onset of the global financial crisis, growth rates for bank service fee revenue from
businesses were low. In fact, in 2004, there was a fall of 3.5%, driven by a large 17% or $310 million fall in
merchant fees. For 2005 and 2006, there were small increases in bank fees paid by businesses of 3.1% and 1.7%
respectively.
In the three years after the onset of the global financial crisis (2008, 2009 and 2010), growth in bank service fee
revenue from businesses averaged 9.8% per year. During this time, businesses increasingly turned to banks to
support their financing needs as other markets tightened or closed entirely.

Chart 8.1 Bank service fee revenue from businesses (%change)

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For small businesses, there was a 5.7% increase in bank service fee revenue this year, while for large businesses
growth was 8.3%.
Over the past three years, average annual growth in fees from large businesses has 9.8% compared with 6.2% for
small businesses.

Table 8.1 Bank service fee revenue from businesses
2005 2006 2007 2008 2009 2010 2011 2012
Small Business $2,754 $2,788 $3,060 $3,211 $3,190 $3,398 $3,612 $3,818
. change $99 $35 $272 $151 -$21 $208 $214 $206
. %change 3.7% 1.3% 9.7% 4.9% -0.6% 6.5% 6.3% 5.7%

Large business $1,831 $1,873 $1,862 $2,063 $2,634 $3,122 $3,201 $3,467
. change $40 $42 -$11 $201 $571 $488 $79 $266
. %change 2.3% 2.3% -0.6% 10.8% 27.7% 18.5% 2.5% 8.3%

Total $4,585 $4,661 $4,922 $5,274 $5,824 $6,520 $6,812 $7,285
. change $140 $76 $261 $352 $550 $696 $292 $473
. %change 3.1% 1.7% 5.6% 7.2% 10.4% 11.9% 4.5% 6.9%

Results at the broad product level were:
Deposit accounts - fees on deposit accounts in 2012 saw a $1 million fall to $623 million, the lowest level
since 1999. Even though the fall this year was small it is the fifth consecutive year in which bank service
fee revenue has fallen for business deposit accounts. Over that period, fees have fallen by $212 million or
25%.
Business loans - after experiencing growth rates of over 20% in both 2009 and 2010, fees from bank loans,
have been growing at a much slower pace over the past two years 4.8% in 2011 and 10.4% in 2012 . The
significant increase in loan fees paid by large businesses over 2009 and 2010 was a direct result of the
global financial crisis. As global capital markets became severely constrained and corporate treasuries
closed, businesses approached banks for their funding needs. This year, 2012, the increase in fees of
$293 million or 10.4% reflects a 6.6% growth in business loan outstandings over the year compared to
0.3% over the previous year. More so, nearly 80% of the increase in business loan fees in 2012 was paid
by large businesses.

Large businesses accounted for 63% of bank service fee revenue from business loans this year.

Merchant fees - merchant fees increased by 8.2% over the past year to $2.1 billion. The combined number
of credit card and EFTPOS transactions, however, increased by 11.1% over the same year. Merchant fee
reform saw merchant fees fall by $343 million or 19% over 2004 and 2005.
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Readers should note that there has been extensive reclassification and recategorisation of component fees for
bank bills which resulted in major revisions to these data in 2010. It is expected that these changes may have
impacted on the growth rate for 2010. Bank fees paid by businesses, for bank bills, increased by 73% in 2010 and
were 11% this year.
Table 8.2 Bank service fee revenue paid by businesses by product
ALL Businesses 2006 2007 2008 2009 2010 2011 2012
Deposit Accounts $812 $835 $808 $708 $646 $624 $623
. change $5 $23 -$27 -$100 -$62 -$22 -$1
. %change 0.7% 2.8% -3.2% -12.4% -8.8% -3.4% -0.1%

Loans $1,601 $1,671 $1,821 $2,244 $2,703 $2,834 $3,127
. change $46 $70 $150 $423 $459 $130 $293
. %change 3.0% 4.4% 9.0% 23.2% 20.5% 4.8% 10.4%

Merchant Fees $1,502 $1,632 $1,743 $1,813 $1,853 $1,910 $2,068
. change $19 $130 $111 $70 $39 $58 $158
. %change 1.3% 8.7% 6.8% 4.0% 2.2% 3.1% 8.2%

Bank Bills $68 $73 $98 $108 $187 $236 $262
. change $3 $5 $26 $10 $79 $50 $26
. %change 5.0% 6.6% 35.2% 9.7% 73.0% 26.5% 11.0%

Other $678 $711 $804 $951 $1,131 $1,208 $1,204
. change $2 $34 $93 $147 $180 $77 -$3
. %change 0.3% 5.0% 13.0% 18.3% 19.0% 6.8% -0.3%

Total $4,661 $4,922 $5,274 $5,824 $6,520 $6,812 $7,285
. change $76 $261 $352 $550 $696 $292 $473
. %change 1.7% 5.6% 7.2% 10.4% 11.9% 4.5% 6.9%

Over 2012, bank service fee revenue from business loans accounted for 43% of total bank service fee revenue
from businesses, the highest contribution, from this category, on record. Fees from business loans have been the
highest contributor to total bank fees from businesses for the past eight years (from 2005). Merchant fees were the
highest contributor for six years prior to that (1999-2004).
In 2012, merchant fees were the second highest category of fees from businesses at 28%.
Fees from deposit accounts held by businesses made up 9% of bank service fees from businesses in 2012, the
lowest proportion on record. For eleven years, from 1997 to 2007, deposit accounts contributed 16% to 20% to
total bank service fee revenue from businesses.

Chart 8.2 Bank service fee revenue from businesses

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Over all five years shown in the chart below, 2008 to 2012, fees from business loans were the highest contributor
to bank service fee revenue from businesses while merchant service fees were the second highest contributor.

Chart 8.3 Contribution to bank service fee revenue from businesses

The chart below shows that banks business loan outstandings were $655 billion at the end of June 2012 compared
with $615 billion at the end of June 2011 growing by 6.6% over the year. This was the strongest growth in three
and a half years.
The chart shows that the total volume of business loan outstandings is at near record levels.

Chart 8.4 Business loan outstandings (banks)

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The ratio of total bank service fee revenue from businesses loans to total loan outstandings for businesses fell, in
trend terms, over the period 2001 to 2008 but has turned upwards over the past three years.
Even though there has been an uptick in the ratio, it remains lower than the average for the first half of the decade.

Chart 8.5 Ratio of bank service fee revenue from businesses loans to business loan outstandings

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9. Exception fees
This is the fifth year that exception fees data have been collected as part of the annual Bank Fees Survey.
Over 2012, a total of $654 million of exception fees were paid by households and businesses. This was a small
increase of 2.6% or $17 million over the previous year.
In 2012, households paid $572 million in exception fees while businesses paid $81 million.
Over the previous two years, 2010 and 2011, there were very large falls in exception fees. In that time, total
exception fees fell by $853 million or 57%. For households, the fall over 2010 and 2011 was $743 million or 57%
while for businesses it was $110 million or 56%.
This year, as with last year, exception fees accounted for 5.8% of all bank service fee revenue, compared with over
13% for the first two years of the survey.

Table 9.1 Summary of exception fees
Exception fees 2008 2009 2010 2011 2012
1. Households $1,184 $1,293 $654 $550 $572
Transaction accounts $688 $674 $292 $233 $258
Other accounts $13 $11 $2 $2 $3
Loans $483 $608 $360 $315 $312
. Housing $34 $54 $34 $36 $35
. Personal $34 $42 $33 $24 $25
. Credit cards $415 $510 $293 $255 $251
Other $0 $0 $0 $0 $0

2. Business $203 $197 $112 $87 $81

Small Business $174 $164 $96 $74 $69
Deposits $121 $113 $54 $43 $39
Loans $53 $52 $42 $31 $29
Merchant fees $0 $0 $0 $0 $0
Bank bills $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0

Large Business $29 $33 $16 $13 $13
Deposits $11 $10 $6 $7 $6
Loans $18 $23 $10 $7 $7
Merchant fees $0 $0 $0 $0 $0
Bank bills $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0

3. Total $1,387 $1,490 $766 $637 $654

For households, exception fees on transaction accounts have fallen by $721 million or 56% over the past three
years.
Exception fees across all loan products for households have fallen by 49% or $296 million over the past three
years. In particular, exception fees on credit cards have fallen by $259 million or 51%.
For businesses, exception fees have fallen by $116 million over the past three years with small businesses
accounting for the vast majority of that fall, being 82% or $95 million. In terms of the actual fall in fees for small
businesses over that time, it has been from $164 million in 2009 to $69 million in 2012, a fall of 58%.

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Table 9.2 Change in exception fees over past three years to 2012
Exception fees 2010 2011 2012 3 years %3 years
1. Households -$639 -$104 $22 -$721 -56%
Transaction accounts -$382 -$59 $25 -$416 -62%
Other accounts -$9 $0 $1 -$8 -76%
Loans -$247 -$45 -$4 -$296 -49%
. Housing -$19 $2 -$1 -$19 -34%
. Personal -$9 -$9 $1 -$17 -40%
. Credit cards -$217 -$38 -$4 -$259 -51%

2. Business -$85 -$31 $0 -$115 -59%

Small Business -$68 -$29 $1 -$96 -58%
Deposits -$59 -$18 $3 -$73 -65%
Loans -$9 -$11 -$2 -$22 -44%

Large Business -$17 -$2 -$1 -$20 -60%
Deposits -$4 $1 $0 -$4 -38%
Loans -$13 -$3 -$1 -$16 -70%

3. Total -$724 -$135 $23 -$836 -56%

In 2012, exception fees represented 0.8% of banks total operating income, unchanged from the previous year. In
2008 and 2009, the ratio was much higher, above 2.0%.

Chart 9.1 Exception fees as a % of operating income

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At $258 million in 2012, exception fees on household transaction accounts were 0.05% of total household deposits,
the same as the previous year, 2011. This ratio was over three times that level in 2008 and 2009.

Chart 9.2 Households: Exception fees on household transaction accounts as a % of deposits

Table 9.3 shows exception fees as a proportion of the outstanding balances for each product category. Apart from
being very low for each product, the proportions over the most recent three three years have been much lower than
for the first two years (2008 and 2009).

Table 9.3 Exception fees as a proportion of balances
Exception fees as % of balances
2008 2009 2010 2011 2012
1. Households
Transaction accounts 0.207% 0.166% 0.065% 0.048% 0.049%

Loans 0.062% 0.069% 0.036% 0.029% 0.028%
. Housing 0.005% 0.007% 0.004% 0.004% 0.003%
. Personal 0.043% 0.061% 0.049% 0.037% 0.041%
. Credit cards 1.272% 1.467% 0.792% 0.648% 0.619%

2. Business
Deposits 0.052% 0.042% 0.019% 0.011% 0.011%
Loans 0.021% 0.019% 0.014% 0.011% 0.010%

Household and businesses make enormous use of their transaction accounts and credit cards. In terms of
transaction accounts, over the 12 months ending June 2012, $15.1 trillion was transacted using ATMs, EFTPOS,
Direct Entry and Cheques.
In 2012, $255.8 billion worth of credit card transactions took place. Exception fees as a proportion of credit card
spending was 0.10% a significant fall from 0.21% three years ago.

Table 9.3 Exception fees as a proportion of transaction value
Exception fees
Value of
transactions
% of value of
transactions
$m $bn
Transaction accounts $258 $15,085 0.002%
Credit cards $251 $255.8 0.10%
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10. Bank service fees and low-income earners
Household vary in their capacity to pay bank fees and this raises the issue of access to banking services across
households. As such, a group of consumers requiring particular consideration are those on low incomes.
An analysis of data from the ABS Household Expenditure Survey reveals that lower-income households pay a
lower share of fees on their bank accounts than consumers with high incomes.
The data shows that the lowest three income quintiles contributed 14% each to the total duties, taxes and charges
on financial institution accounts over the 2009-10 financial years. The two highest income quintiles paid double
that, at 29% each.
Readers should note that ABS have flagged that the estimate for the lowest income quintile has a high relative
standard error.

Table 10.1 Duties, taxes and charges on financial accounts
Average weekly expenditure 2009-10 Gross Household Income Quintile
Lowest Second Third Fourth Highest All
Total Duties, taxes, charges on financial inst accts $1.54 $1.50 $1.52 $3.07 $3.09 $2.15
%Share 14% 14% 14% 29% 29%

Total weekly household expenditure 2009-10 $559 $815 $1,169 $1,479 $2,160 $1,236
% on Duties, taxes, charges on financial inst accts 0.28% 0.18% 0.13% 0.21% 0.14% 0.17%
Source: ABS 2009-10 Household Expenditure Survey

The chart below shows the share of the total expenditure on financial institution account charges across the five
income quintiles.

Chart 10.1 Proportion of financial charges paid by income quintile

0%
5%
10%
15%
20%
25%
30%
Lowest Second Third Fourth Highest
Households - share of duties taxes and charges of
financial institution accounts paid

Over the six years between the two ABS household expenditure surveys, the percentage of weekly spending on
duties, taxes and charges on financial institution accounts by the lowest income quintile has fallen from 0.34% (in
2003-04) to 0.28% (in 2009-10).
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Chart 10.2 Proportion of average weekly income paid on financial charges by lowest income quintile

0.0%
0.1%
0.2%
0.3%
0.4%
2003-04 2009-10
Lowest income quintile - proportion of weekly
expenditure on duties, taxes and charges on FI accounts

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11. Financial services prices
The Australian Bureau of Statistics produces a comprehensive measure of price change for financial services as
part of the quarterly Consumer Price Index. This measure was first included in the CPI from 2005. The ABS
measure includes bank fees, interest payments and other charges as well as transaction volumes in order to
capture the price change in the most comprehensive way.
Changes to the ABS methodology for producing a measure of financial services price change have meant that ABS
has restarted this data series from 2011.
Over the 12 months ending June 2012, the price of financial services increased by 1.3%, compared with an
increase of 1.2% for the overall CPI.
The price of the key banking services - deposit and loan facilities - increased by only 0.1% over the year ending
June 2012.

Table 11.1 Price changes: Financial Services and CPI
Financial Services
% change
Deposit and
loan facilities
Other financial
services
Total financial
services CPI
Sep-11 -0.5% -0.1% -0.2% 0.6%
Dec-11 0.1% 0.5% 0.4% 0.0%
Mar-12 0.3% 0.9% 0.8% 0.1%
Jun-12 0.2% 0.3% 0.3% 0.5%

Total for 12 months 0.1% 1.6% 1.3% 1.2%

The CPI allows comparison of price change across a broad range of items of household expenditure. The table
below shows the price changes for a range of common items of expenditure by households. It shows that the
increase in the price of financial services was low when compared with other items, over the 12 months ending
June 2012.

Table 11.2 Price comparisons
Price change to June 2012 %
Electricity 10.7%
Child care 9.9%
Gas and other household fuels 8.0%
Secondary education 7.7%
Water & sewerage 6.1%
Preschool and primary education 5.8%
Property rates and charges 5.3%
Urban transport fares 5.2%
Rent 4.4%
Health 3.6%
Automotive fuel 2.7%
Financial services 1.3%
Communication 0.9%
Food -3.2%

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12. Bank service points and improvements
Bank service fee revenue is income for services provided by banks. As such, it would seem reasonable that
customers would expect to receive good service from banks, along with improvements to banking products and
services over time.
As at the end of June 2012, banks maintained 5,783 branches making up 85% of all branch locations for banking
services in Australia. Branch numbers have increased for the past eleven consecutive years, since 2001. In that
time, there has been a net increase of 994 branches, a 21% increase in branches.
Banks provide a further 2,135 service points such as agencies, rural financial centres and other; while Bank@Post
now has 3,250 service points.
Access to banking services at ATMs or through EFTPOS has shown solid growth over recent years.

Table 12.1: Summary of bank service channels
Jun-12
Face-to-face: Total
Banks 7,918
Building Societies 298
Credit Unions 908
Other ADIs 1
Bank@Post 3,250
Total: All ADIs 12,375

Face-to-face: Branch Level
Banks 5,783
Credit Unions 767
Other ADIs 1
Subtotal: Branch 6,809

Face-to-face: Other
Banks 2,135
Credit Unions 141
Other ADIs 0
Bank@Post 3,250
Subtotal: Other 5,566

ATMs 30,511

EFTPOS 764,549
Source: APRA re: face-to-face channels, APCA re: ATMs and EFTPOS

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In terms of improvement to bank services, banks continuing investment in technology provides customers with a
range of service channels and accessibility to bank services. The huge volumes of transactions supported by bank
systems are evident in Table 7.1.
This investment in improving customer experience is an ongoing process for banks. Some of the recent
innovations and achievements are:
Internet and mobile phone banking - innovations continue in internet and mobile phone banking. An increasing
level of information is being made available to customers so that they can manage their own finances directly.
These include detailed statements for personal transaction and investment accounts, home loans and credit
cards, and a wide variety of tips and information on the use of financial products.
ATMs banks have been refreshing their ATM fleets to meet new compliance requirements. The new ATMs
provide features such as bigger screens, faster response times and graphics to improve customer usability, as
well as better security through anti-skimming and other technologies.
New products and services banking is a very competitive environment and banks are continually
investigating ways to enhance or design products and services improvements to suit the needs of a very
diverse consumer market and business environment.
Security and fraud - ongoing improvements to protection for customers, through state-of-the art security
technology, which keeps fraud incident rates at very low levels.
New branches as stated above, this year (the 12 months to the end of June 2012) was the eleventh
consecutive year over which banks have increased their branch level of service adding 994 new branches or a
21% increase over this time. In the last year alone, bank branches increased by 212 branches (much of this
was as a result of credit unions and building societies becoming banks over that period).
Access in remote areas - all three categories of lesser accessibility (i.e. areas classified as moderately
accessible, remote and very remote) have seen average annual growth rates (over the past five years) in bank
branches and other face-to-face service presence higher than that for the more accessible areas (i.e. highly
accessible and accessible). In 2012, banks made up 91% of branches in moderately accessible areas, 90% in
remote areas and 53% in very remote areas.
Extended trading and mobile banking - many banks are offering weekend and extended trading hours, as well
as mobile banking services for home lending and other products.
Customer service technology ongoing investment in customer service technology has resulted in more
efficient and more seamless client servicing.
Customer satisfaction data from Roy Morgan Research support the fact that banks have been improving customer
service. Over recent years, the data has shown a noticeable upward trend in customer satisfaction which was at a
record 78.2% at June 2012.
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Appendix 1 Bank service fee revenue from households

2006 2007 2008 2009 2010 2011 2012
Transaction Accounts $1,773 $1,873 $2,110 $1,862 $1,196 $1,079 $1,054
. change $144 $100 $237 -$248 -$666 -$116 -$25
. %change 8.9% 5.6% 12.7% -11.7% -35.8% -9.7% -2.3%

Other Accounts $81 $81 $85 $76 $55 $61 $51
. change $7 $0 $4 -$8 -$21 $5 -$9
. %change 9.9% -0.6% 5.4% -9.9% -27.6% 9.8% -15.3%

Housing Loans $904 $1,088 $1,164 $1,381 $1,396 $1,239 $1,218
. change $88 $184 $76 $217 $15 -$156 -$21
. %change 10.8% 20.3% 7.0% 18.6% 1.1% -11.2% -1.7%

Personal Loans $280 $304 $313 $343 $326 $300 $318
. change $24 $24 $9 $30 -$17 -$26 $18
. %change 9.3% 8.4% 3.0% 9.5% -5.0% -7.8% 5.9%

Credit Cards $1,075 $1,181 $1,313 $1,396 $1,245 $1,293 $1,312
. change $187 $106 $132 $82 -$151 $49 $19
. %change 21.0% 9.9% 11.2% 6.3% -10.8% 3.9% 1.5%

Other $67 $88 $107 $115 $106 $92 $98
. change -$14 $20 $20 $8 -$9 -$15 $7
. %change -16.9% 30.5% 22.3% 7.3% -7.4% -13.9% 7.1%

Total households $4,180 $4,614 $5,093 $5,173 $4,324 $4,064 $4,052
. change $437 $433 $479 $80 -$850 -$259 -$13
. %change 11.7% 10.4% 10.4% 1.6% -16.4% -6.0% -0.3%
2013 Report

42

Appendix 2 Bank service fee revenue from businesses

ALL Businesses 2006 2007 2008 2009 2010 2011 2012
Deposit Accounts $812 $835 $808 $708 $646 $624 $623
. change $5 $23 -$27 -$100 -$62 -$22 -$1
. %change 0.7% 2.8% -3.2% -12.4% -8.8% -3.4% -0.1%

Loans $1,601 $1,671 $1,821 $2,244 $2,703 $2,834 $3,127
. change $46 $70 $150 $423 $459 $130 $293
. %change 3.0% 4.4% 9.0% 23.2% 20.5% 4.8% 10.4%

Merchant Fees $1,502 $1,632 $1,743 $1,813 $1,853 $1,910 $2,068
. change $19 $130 $111 $70 $39 $58 $158
. %change 1.3% 8.7% 6.8% 4.0% 2.2% 3.1% 8.2%

Bank Bills $68 $73 $98 $108 $187 $236 $262
. change $3 $5 $26 $10 $79 $50 $26
. %change 5.0% 6.6% 35.2% 9.7% 73.0% 26.5% 11.0%

Other $678 $711 $804 $951 $1,131 $1,208 $1,204
. change $2 $34 $93 $147 $180 $77 -$3
. %change 0.3% 5.0% 13.0% 18.3% 19.0% 6.8% -0.3%

Total $4,661 $4,922 $5,274 $5,824 $6,520 $6,812 $7,285
. change $76 $261 $352 $550 $696 $292 $473
. %change 1.7% 5.6% 7.2% 10.4% 11.9% 4.5% 6.9%

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