Below is an abbreviated transcript of me visiting a banking branch nearby:
Me – Hi, I need to send some money overseas to pay for goods.
Teller – Sure we can help you with that, also did you know that this branch is closing next week, and the nearest branch is a 10min drive away.
Me – Why are you closing?
Teller – People don’t really come into branches anymore, and you can do everything online or via the ATM.
Me – (looking around) Seems like some people still come into the branch, that is why I had to wait in a que. So, tell me, how do I do this manual overseas transfer using
Swift codes etc, where you need a bank manager to sign the docs? Can I do that online or via ATM?
Teller – Er no, you must come into a branch.
Me – But you are closing this branch.
Teller – Yes we are; anything else I can help you with?
Look around you, bank branches are disappearing. I have seen one report that says over 550 have closed, nationwide since January 2020.
Have you still got your local branch or are you driving to another suburb to get served.
My local ones have all closed and now I drive 20 mins to go into a branch to open a new account.
Crazy stuff.
Banks love this point in the property cycle as they increase profitability with higher margins any way they can.
I remember before GFC, banks closed a bunch of branches back then too. And what do you know, towards the end of the GFC carnage, they opened them back up again to ‘increase the footprint’.
Of course, they will tell you it is to service you better.
Banking / finance is embedded into the property cycle, the two simply cannot be separated.
At this point they (banks) are on maximum attack mode and will be increasing margins with the same gusto a hungry dog goes after a fresh bone.
Have you noticed that banks rarely increase interest rates more than the RBA amount when the central bank adjusts UPWARD?
Why?
If they did, the streets would be filled with blood….
It seems they have more success increasing the interest rate margin spread when rates are on the way down.
This is because while we might be annoyed, they didn’t ‘pass on’ the full reduction, our rate is still lower and we are happy.
Currently in an interest rate increasing environment, banks will be (and have been for some time) chasing other ways to make money.
Closing branches and going electronic is one of them.
ANZ has a new banking product that is online only, you’re not even allowed into a branch to sort a problem.
ANZ Plus allows you to open an account from you phone app and rewards you with no fees and higher interest rates etc.
Why?
Cause they don’t have the cost of a branch.
ANZ are selling this new way of banking as a better, more personal service with money coaching available and a super app that is waaaay better than normal banking apps.
It’s amazing that the sales pitch is “more personal and individual service”, because there are no branches.
Who believes this stuff?
Does anyone actually think a bank will do something that benefits you solely?
Anyway, what does this have to do with property?
As I mentioned before, banking and finance is totally connected to the property cycle. As we come to the peak in 2025, just like the craziness of emotional buying in the markets leveraging themselves to the nose, the finance industry will be leveraging anything it can to make more money.
And technology is always something they fall back on to perform that leverage.
Make no mistake, if a bank says that a new way of doing things will mean better service for you, it will undoubtedly mean worse service.
Banks are marketing giants. Watch what they are marketing now and overlay that with your knowledge of the property cycle and my forecasted dates for this year and future years.
Right now they are on a marketing kick to get their new wave of ‘super apps’ into your hand. This gives them more data on your spend and with more data comes more specific marketing and higher margins.
The tech available to them is extremely advanced and the ability to profile you and your spending habits, mean they will they will extract the maximum dollar spend and leverage your life-force to the fullest extent.
You are not a person to the bank’s computer, you are a number, and it is their job to withdraw maximum profits from you at all stages of your life.
They are very good at it; you need to be better.
Think I am overreacting?
Let’s leave this scribbles up online and see how well it ages.
I never pull any articles down off my website, even if I am wrong, so we can revisit it later and see what we all think.
Banks are money making machines.
Use them or be used by them, it’s your choice.
You can follow me directly on Twitter and also on Facebook
Since 2004, Scotty North has been helping people buy the best properties for their needs at prices that simply speak for themselves.
Scotty has been instrumental in bridging the gap between financial planning and traditional real estate transactions through his property advice model.
Scotty North is a Qualified Property Investment Advisor (QPIA), with accreditation’s in financial planning, mortgage broking and real estate.
By carefully considering his clients’ goals and planning for market changes via demographics and trends, Scotty designs a future proof outcome not only specific to the client’s needs but dynamic in its execution with performance indicators and exit strategies built in.