How homeowners can win out of 'ferocious' competition between banks - ABC listen - ABC News & Headlines – Australian Broadcasting Corporation

Economists expect the Reserve Bank to raise interest rates next week, but a big four bank executive says mortgage holders can find a silver lining in the tough economic times. 

Westpac chief executive Anthony Miller tells Tasmania Mornings' Leon Compton that banks are "aggressively" competing with each other at the moment to offer the best interest rates possible and retain mortgage customers. 

"Competition is pretty ferocious at the moment, and the winner in that contest is the consumer," he says. 

"To the extent that you want a better deal, then speaking to your banker is definitely the right course of action."

He also explains why he's opening a new bank branch in Smithton today and offers his take on inflation and the global economy. 

Anthony Miller says 95 to 96 per cent of his bank's customers bank online. (Unsplash: Vitaly Gariev)

Anthony MillerIt's classically been the main way we've combated inflation, which is increased interest rates, slow down demand, therefore slow down the economy, slow down inflation. But probably the better path is how do we solve inflation? And one of the key unlocks, and you hear it all the time is, how do we improve productivity so that for each labour hour or each unit of capital invested, we produce more or generate more, will help temper or reduce inflation? So I think the focus on how do we lift productivity across the country is perhaps the more important or more sustainable pathway in terms of addressing inflation in Australia. It's also obviously the way to improve the standard of living for all Australians.

Leon ComptonSouthern Breakfast presenter Ryk Goddard said his bank called him and said, hey, we think we can give you a lower interest rate. I'm not sure that's happened a lot in recent times. Is this part of the story of a new competition between banks to keep customers, even if it comes at the expense of margins?

Anthony MillerYeah look, I think it is the case that the banks are competing aggressively. And we've got obviously the big four, but there's a whole range of regional and smaller banks that are actively participating in the mortgage market. And there's a lot of non-bank participants also actively competing in the market. So competition is pretty ferocious at the moment, and the winner in that contest is the consumer.

Leon ComptonWould your advice to our listener with a mortgage this morning be to call their bank and talk about their interest rate right now?

Anthony MillerYes. You should always stay in touch with your bank and to the extent that you want a better deal or trying to find a better deal, then speaking to your banker is definitely the right course of action.

Leon ComptonWestpac's Anthony Miller is in Smithton this morning, which is interesting. Banks typically telling us people want fewer face-to-face services, so we're closing down regional branches. You're opening one in Smithton today. Tell me what's going on at the service centre there.

Anthony MillerWell, we've worked through, what's the best way to serve customers, particularly in regional Australia? And it is the case that about 95 to 96 per cent of what people do with us is all digital online. But there is a need and there is an opportunity to provide more person-to-person connection, more person-to-person service. And that's particularly the case in regional Australia. And so what we're going after is to try and make sure that our offering is a little bit differentiated as compared to others in the sense that, yes, we do have a great digital offering. We want you to use digital services because in many ways that's faster, safer, more reliable. But if you want to connect with a person, if you want to sit down with a banker, then we will provide that capability for you, and that's what we're trying to do here in Smithton. And we opened up in February this year and it's been really pleasing to see what's happened over the last six months. And I'd like to sort of thank the community in Smithton, they've been incredibly gracious and welcoming for our bank and for the people who are working here.

Leon ComptonAnthony, the global bubble. I mean, we've got questions about the global economy. I suppose a lot of it is built around the levels of US debt at the moment. How concerned are you about the global economy?

Anthony MillerCertainly one of the most complicated environments we've seen for a very long time. When you think about there's an enormous amount of growth and other activity occurring in the US, but it seems very concentrated in the context of data centres, AI. On one hand, you've got wars in the Middle East, you've got a war in Europe ongoing, you've got distortions in commodity prices. So I don't think we've seen it as complicated as it is today. What I would say though, is Australia is in a really relatively good position when you think about the strength of our economy, the unemployment rate in our economy, the growth that I think is available for the country and the fact that a lot of our key commodities are still very well in high demand across the world. So I think it's a difficult, complicated environment, but Australia is actually in a relatively good position to navigate that at the moment. But it is of course one which we just have to be careful about and we have to recognise that there's going to be these external impacts on the Australian economy such as we saw with the Middle Eastern crisis and the impact on fuel prices. And so we're going to have to recognise that for the next few years particularly, it's going to be complicated.