Nearly two million Australian consumers have returned to the big four banks as cost-of-living pressures push them to the perceived “safest option”, new research suggests.
Data from Finder’s consumer sentiment tracker shows 80 per cent of Australians bank with Commonwealth Bank, NAB, Westpac or ANZ — the highest number since the comparison website began asking the question in 2019.
That would equate to 16.2 million Australians. In January 2022, 71 per cent of respondents banked with the big four, suggesting an additional 1.8 million customers in less than two years.
“Households are trying to offset the pain of record high interest rates and living costs with certainty around their money,” Finder money expert Alison Banney said.
“Banks act as safe houses for consumer’s cash and the big four banks can feel like the safest option in a turbulent environment.”
Ms Banney said consumers were going back to basics as they look to manage their money.
“After a prolonged period of financial stress Aussies are wanting to feel stability in their finances,” she said.
Australian Bureau of Statistics (ABS) figures last month showed discretionary spending fell 0.7 per cent in the year to June, driven by falls in clothing and footwear, goods for recreation and culture and furniture, floor coverings and household goods.
“Cutting back and being more conservative with their money in general is a healthy response to uncertainty,” Ms Banney said.
She warned consumers not to rule out smaller banks, who could often beat big lenders on interest rates and fees.
“While these big lenders may instil a sense of trust due to their long history, some of the smaller online banks can offer better deals due to having much lower costs due to not having a traditional branch network,” she said.
It comes after new data this week showed household spending growth collapsed in the last 12 months as persistent price pressures and interest rate rises force families to tighten their belts.
Growth in household spending was up just 2.3 per cent in the year to August, compared with 18.7 per cent in the prior corresponding period, according to Commonwealth Bank figures.
The data, which showed growth in household spending rose 0.7 per cent in August, is based on payments data from 7 million Commonwealth Bank customers, equating to 30 per cent of total spending across the country.
Soaring international student arrivals and cost pressures pushed consumer spending higher in August. Despite ongoing inflationary pressures, households still opened their wallets to splurge on World Cup tickets as Matildas mania gripped the nation.
The figures come as the Reserve Bank works to curb consumption growth in an effort to bring inflation, which currently sits at 4.9 per cent, back to the bank’s 2 to 3 per cent target range.
However, the central bank must avoid a rapid decline in consumer spending that could potentially induce a recession.
The RBA has kept the official cash rate on hold at 4.1 per cent since June after the fastest tightening cycle on record took a battering ram to Aussie borrowers.
Fresh GDP numbers released last week showed while the economy expanded by 0.4 per cent in the three months to June, economic growth per person went backwards for the second consecutive quarter, otherwise known as a ‘per-capita recession’.
Commonwealth Bank chief economist Stephen Halmarick said the household spending continued to remain subdued as the consequences of the RBA’s efforts to slow growth washed through the economy.
“The effects of 400bp of Reserve Bank of Australia interest rate rises is clearly reflected in a significant slowdown in annual household spending growth measured by the CommBank HSI Index,” Mr Halmarick said.
— with NCA NewsWire