ANZ comes out fighting

By KEVIN TAYLOR

Weeks before Kiwibank is due to open, ANZ has attacked its biggest selling point by introducing a new low-fee account.

ANZ yesterday denied it was making a preemptive strike on the looming competition, but its move is seen as another blow to the Government-backed competitor.

Banking industry experts expect other banks to make similar offers to try to keep customers.

The ANZ claims its new Connect 10 account has the lowest fee structure being offered by any major bank in New Zealand.

The account has no monthly administration fee and allows 10 free electronic transactions a month.

Treasury papers made public last year by Act MP Rodney Hide questioned NZ Post's assumption that other banks would do little to compete with Kiwibank.

Mr Hide yesterday welcomed the ANZ's new account as good news for consumers, but said it again showed the officials advising the Government had been correct.

"There has been a targeted response to Kiwibank from other banks.

"They are not going to let valuable customers walk out the door without responding."

ANZ said it was responding to customer concern about fees that arose from its own research and independent surveys by organisations such as Auckland University Business School and Consumer magazine.

ANZ fared poorly in these surveys. One done by the Consumers Institute showed ANZ had among the highest fees of any bank.

In the survey, cheque accounts containing $100 were set up with seven banks and one savings institution. Each had four $10 automatic payments going out each month, and four $10 deposits coming in.

Fees left the BNZ and ANZ accounts in deficit by $10 and $8 respectively after a year.

But yesterday ANZ struck back, issuing its own graph showing the performance of its new account was markedly superior to the other big four banks' basic accounts.

At the end of the year, the ANZ's account still had more than $50 left after starting with a $100 balance, but the BNZ's Ready Money account and WestpacTrust's Active were in the red.

David Tripe, director of Massey University's Centre for Banking Studies, said it was a realistic to conclude ANZ was responding to Kiwibank with its new account.

"They have the potential to lose some customers to Kiwibank."

Connect 10 will be available only to customers who have been with ANZ more than a year - reinforcing the perception it is responding to the threat of competition by trying to retain existing customers.

"The key to this would be the one-year thing," Mr Tripe said, "because that means they are weeding out some of the lower-value customers by holding on to those that are relatively more attractive for them."

Mr Tripe said he would not be surprised if other banks followed the ANZ, which had to be applauded for offering a low-cost account for ordinary people.

But he would want to read the fine print to see what other charges might apply.

ANZ public relations manager Steve Fisher denied the bank was responding to Kiwibank. The new account, which will not include a chequebook or overdraft facility, was for those wanting to go back to a simpler way of doing banking.

The 12-month restriction was a way of rewarding customers for the length of time they had been with ANZ.

Consumer editor Simon Wilson said any bank introducing a low-fee account at this point was positioning itself to compete with Kiwibank.

"Objectively, people now have the ANZ one to choose from when considering whether to go to Kiwibank."

He welcomed the ANZ's new account, if it was offering what the bank was claiming.

But he was disappointed the bank was not lowering fees on existing standard accounts, something he would like to see happen with other banks as well.

Mr Wilson expects more competition in that part of the market now, with other banks responding.

He said the magazine's fee survey last year showed some banks were better placed to respond to the threat of Kiwibank than others.

ANZ and WestpacTrust were among the worst-prepared.



Asked if BNZ was going to introduce a similar account to the ANZ, spokeswoman Jacqui Millar said the bank was constantly reviewing its products, and customers were telling it they wanted a mix of value, choice and convenience.

"We believe our products deliver."

In November, ASB created a low-cost account aimed at people making lots of electronic transactions.

Called Streamline, it charges 20c for each eftpos transaction compared with 60c beyond the first ten for the new ANZ account.

Marketing manager Jonathan Symons said it was not a response to Kiwibank, and ASB did not have any specific plans at this stage to respond.