Do you know how ethical your banks are in Australia? After spending $4.5billion in customer remediation expenses (mostly as a result of their dodgy behaviour identified in the Royal Commission), the big 4 banks collectively made $26.9 billion profit for the year (after expenses). This is more than the 99th biggest economy in the world from Estonia!
Profit maximisation, a structure where profit supersedes everything else including people, was the root cause of the issues identified in the Royal Commission. Every day, banks have to make big decisions weighing out whether to cater to your interests as a consumer and our environment; or to meet increasing pressure to increase profits.
Why Should You Care About Where You Bank?
Depending on who you decide to bank with, did you know you could be a part of the problem that is contributing to climate change? This results in banks investing the money it controls on your behalf to finance industries that contribute to global warming. Your mortgage is one of the biggest financial commitments you’ll ever make. It is also an important purchasing decision that can shape the world you want to live in.
Our spending decisions drive change. The billions made every year by banks are because of our collective decisions. By letting our wallets do the talking and walking, our spending decisions will drive change. Banks and financial institutions have the power to drive investment in and growth of technologies and solutions to climate change.
Be a responsible homeowner. As a product, home loans are one of the most profitable. According to KPMG, the big 4 banks have $2.7 trillion worth of home loans. When you make the responsible decision to switch out home loans to ethical banks in Australia that align with your values; you can sleep well at night knowing your part of the solution. This is already happening around us! Our friends, colleagues, and communities are making those decisions resulting in customer-owned banks growing rapidly by 7.3% in their residential home loans in the last year alone.
‘Ethical’ Banks in Australia
What is the solution to banks caring about their customers? Right now customer-owned banks known as credit unions, mutual banks, and building societies are likely to be the answer.
These institutions differ from big banks in one major way: they do not have shareholders. When the focus is on stakeholders, rather than shareholders, those organisations operate in the interests of its members and the wider community in mind.
“Our organisations are effectively owned by their members, which are the customers. That means 100% of profits go back to customers, not as cash, but through product development and investment in the business. (There is) not the constant pressure on the bottom line to drive returns to shareholders”.
Mike Lawrence, Chief Executive of the Customer Owned Banking Association (COBA)
What’s The Cost To You?
Customer-owned banks were increasingly competitive according to banking expert, Steve Mickenbecker, at financial comparison site Canstar. They often have as good or better interest rates and home loan products than the major banks.
At BFG, we compare various factors when choosing a bank and a certain product. This includes interest rates, fees, offset accounts, technology, convenience, turnaround time, ethical investments & other home loan features to compare apples to apples.
Our Favourite Ethical Banks in Australia
These are just two of our favorite ethical banks here in Australia that we believe align with the interests of customers and are ethical in their practices and investments
Teachers Mutual Bank Limited: Sixth-year TMB ‘World’s Most Ethical Companies’ by Ethisphere Institute which identifies companies that exhibit high moral standards in their business practices.
Bank Australia: do not invest in fossil fuel, live animal export, gambling, arms industry and tobacco. The new ‘Clean Energy Home Loan’ offer interest rate discounts to Bank Australia customers who buy or build a 7+ star NatHERS rated home.
Collectively What Can We Accomplish?
In short – accountability. We can keep banks accountable with how they spend our money. Action speaks louder than words. It is our collective responsibility to stand up and take action like other responsible Aussies and parents.
At Benevolence Financial Group, we report and track how your bank operates so you are not left in the dark. We also invest half of our commission in social projects, because we don’t just talk the talk. As a business, we believe it’s our responsibility to boldly tackle our world’s issues together. Plus as our customer, you get an advantage… a tax advantage!
If you want to find out more about what we do and how to get involved as a customer, schedule a free consultation with us now. Take the first steps to improve your world and what matters most to you!
“Humanity is now standing at a crossroads. We must now decide which path we want to take. How do we want the future living conditions for all living species to be like?”
Samuel Philipos is founder and principal mortgage broker at Benevolence Financial Group. Samuel is an ex-banker with over 5 years of experience and is currently being supported by Macquarie University Incubator and City of Parramatta Council