Westpac sees community as “potential profit pools”

Related link: Do you know who you’re really banking with? See what the Big 4 Banks own in our Personal Money blog.

The customer owned banking industry today said Westpac’s comments regarding its multi-branding strategy show a disregard for Australian consumers.

Westpac yesterday admitted that “a good chunk of the population, for whatever reason doesn’t want to bank with a big bank”*, which is why its sub brands are an effective strategy.

The bank added that sub brands like St George and Bank of Melbourne allow Westpac to “put an offer in front of a bigger portion of the potential profit pool than we would if we were limited to just the one brand”.

Abacus CEO Louise Petschler said there is a widespread lack of understanding of major bank multi-branding which Westpac is adding to with its strategy and public comments.

“If consumers don’t want to bank with a major bank, then creating a sub-brand to attract them seems quite strange to us,” Ms Petschler said.

“We don’t think Australians will also respond well to being characterised as ‘potential profit pools’ as it appears.”

The Balance Banking campaign launched by Abacus last month highlighted that Australians are concerned about banking competition and confused about who owns who in banking.

Independent research of 1000 Australians found a very low awareness of ownership.

Abacus is not against multi-branding as such but strongly believes consumers should receive better information that clearly and prominently shows ownership structure.

Westpac also said yesterday there was a particular strategy to give Australians banking competition: “The trick is to make sure that as much as possible those brands are complementing each other rather than just competing head to head with each other.”

Abacus continues to lobby for an independent banking inquiry and comments like these add weight to the argument.

“There are no tricks in genuine competition. Competition is not selective, it’s about being genuine and offering the best value and customer service,” Ms Petschler added.

To find out more about the Balance Banking campaign visit www.balancebanking.com.au.

* Westpac Multi Brand Strategy brings in the money, The Age Business Day, 26th March, 2013.