Generous gift from banks

It's not often that New Zealand's mostly Australian-owned banks give a $140 million gift to their customers. Yet that's what they have done over the past four months, thanks in part to the former chief executive of one of those banks.

Cameron Clyne was boss of Bank of New Zealand until last year, when he was recalled to head office in Melbourne and promoted to chief executive of the overall National Australia Bank group.

He's an unusual banker and genuinely seems interested in helping customers. He transformed BNZ from a pretty stodgy organisation into one with a friendlier approach and a bit more marketing flair.

One of his first moves when he got the top job in Australia was to abandon the so-called honour and dishonour fees that were a major irritant for call-centre operators and customers alike.

They were spending so much time dealing with complaints about "accidental" fees and reversing them that Clyne worked out it would be cheaper and easier to drop them altogether.

NAB's decision in July to drop fees and the resulting move at BNZ had an immediate impact. Westpac was the next to move, reducing its dishonour fees in both countries and also removing a range of other account fees, including some on credit cards.

ANZ National reworked its fee structures across the board to reduce internet banking and other "self-service" fees, as well as lower dishonour fees. The cost of these changes was almost triple the cost of BNZ's changes.

Even local banks Kiwibank and TSB have followed the Australian-owned banks, reducing their fees on dishonoured cheque and credit card payments.

Only ASB has yet to move, although its parent CBA cut dishonour fees in Australia in August. ASB said last week it would cut some fees from January 1, but has yet to announce the details.

The net result of all this was a significant reduction in costs for customers at a time when bank profits were slashed by bad debts and reduced margins.

It tends to disprove the idea that the big four Australian-owned banks operate as an oligopoly. To be fair, that was disproved comprehensively in 2004 when BNZ launched a series of mortgage price wars with its "Unbeatable" campaign that fired up the housing market so much it frustrated the Reserve Bank's attempts to slow it down.

It shows banks will cut prices to win market share and customers should not be afraid of wielding that power.