Banks
Would love to trade 1 cow with 300 chickens, but mutual banks will do for now
Wazzaaaaaaa,
Before I take show you the rabbit hole I’ve made with banks, here are 4 dot points of pre-reading:
Banking is one of those boring/hard things to make decisions on but they are also the flow of commerce. So if we’re all about voting with our dollars, and our dollars sit in our bank, we should probably keep our dollars somewhere we agree with.
No bank is really ethical so this is just me trying to figure out the most sustainable way to store money. Don’t @ me with “the words ethical and bank are an oxymoron”.
Everything here is based on just what kind of ethics I've been thinking about. Maybe it doesn’t align with the ethics you’ve been thinking about.
These days interest rates are pretty garbo so it’s hard to differentiate through those little percentages. That’s why I’ve gone from an aesthetics (how good is the app) and ethics (how do they invest their money) standpoint.
CommBank and sophisticated marketing strategies at public school
Remember the Dollarmites program where we all got to have fun with money in primary school and CommBank gave you a fun little kids pack to make you feel important?
CommBank literally got into your school to advertise themselves as your bank, and promptly into your core developmental memories and cement an attachment to the yellows of CommBank.
Now that I am an adult and a sophisticated marketer myself (it’s my job), I can respect the game played. It’s a great profiteering strategy. But I do not respect the player, so I quit that beautiful CommBank app and switched to a bank which I felt better represented my values and where I would like to see swathes of money invested.
Here is the process of how I made a decision, and I hope this helps you.
There are 3 types of banks, here’s a summary
All of these guys are regulated by ASIC and APRA under the same set of rules. So in terms of risk to money, they’re all okay - it comes down to a balance of convenience of banking vs sustainability of where banks invest your cash.
Big banks are also kind of embroiled in some new crisis all the time. Remember how last year AMP, ANZ, Commonwealth Bank, Macquarie, NAB and Westpac all had to pay up a few billion because they gave crappy advice?
3 types of banks, more detail
Shareholder owned bank?
Shareholder owned/public banks are listed on the stock exchange and overall controlled by their shareholders (they might not be actual customers of that bank). Usually companies are trying to keep their shareholders, rather than customers, happy. Profits are paid to shareholders rather than members. Keeping shareholders happy = more profits. Generally make more money = more profits = shareholders happy. Easy to corrupt and give bad advice, maybe.
Shareholder owned banks include CommBank, NAB, and Bendigo Bank.
What’s a mutual bank?
Mutual banks do the same thing public banks do but they are owned by its members. That means members are able to vote on constitutional matters, plus profits that are made are reinvested back into the bank's products.
A mutual bank is a credit union or building society that has gone through a legal process to have the word “bank” in it and has an asset base of $50 million or more, but typically it’s more.
Mutual banks include Bank Australia, Beyond Bank, Teachers Mutual Bank, and a few others. There are close to 20 or so of them in Australia.
But what’s a credit union or building society?
This is what a bank is before it goes through a process to call itself a bank. They’re sort of lower fidelity banks so it means they have less flexibility that an “ordinary” bank might, service a smaller group or area. Also, credit unions don’t make much/any money, just enough to support themselves. Sort of like any other union.
So which bank?
A bank that is not too hard, not too soft, but just right, felt like a mutual bank, or a customer owned bank.
Customer owned banks don’t have shareholders to please
typically have better customer satisfaction than the big guys
Rates are pretty competitive
Because they are more beholden to customers, generally can’t get away with as much shit, so won’t try as much shit.
Some customer owned banks for your consideration
So, here are a bunch of customer owned banks based on this criteria:
Has a decent app/tech because I’ll probably have a hard time without.
Proactively invests ethically (rather than just not investing in “unethical” business) because it’s those passive dollars that make a difference
Can get an okay rate on savings, that’d just be nice hey. This seems much of a muchness in 2024 though.
I took a look at the banks listed on the Customer Owned Banking Association. They also have a quiz if you want to do that instead.
Personally I went with Beyond Bank because I really liked their think global/act local vibe. Bank Australia’s copy on their website was a little too good and my unchecked “suspicious of good marketing” stance bested me.
Ok, hope that helped you think about where you store your money!
Bye!
PS: A quick one on Up Bank
Originally I was a little apprehensive of Up bank because so many people recommended it to me and it was starting to feel like a cult of Up Bank. And to be totally honest I have become suspicious of any app that is a little too easy to use. Why are you trying to get all my attention? I admit this probably is more reflective of me than of the people with Up Bank (see: suspicious/sophisticated marketer).
Up is funded by Bendigo Bank and appear to be pretty actively divesting from fossil fuels and deforestation, and seem to be doing their darndest to be a bank active on climate.
With that said, in the end it’s still a shareholder bank. And while its got some really clever strategies in place for incentivising customers to be more climate conscious, its ultimate strategy is to, well, create shareholder value.
But with that said, it’s not the worst bank to go with, and we’re talking about banks here so we’re really picking the lesser of evils at the end of the day, right?