Trust in banks has obviously and dramatically been declining. But the banks didn’t care, because they had no realistic competition.

Chris Brycki, founder of Stockspot (an online investment platform) underscores that trust is no longer a selling point for banks – they just don’t care if you trust them or not – “They never sell on good performance or low fees,” he said, “because they can’t.”

Mr Brycki supports his statement with a recent report from the Australian Securities Exchange which illustrates the dramatic decline of share ownership through managed funds and advisers.

“… consumers have been wising up to the amount of fees that get bolted on. They charge an advice fee; and on top of that they put you on a platform that in 80 per cent of cases is aligned with their financial planning business – recommending their own products.”

“The reason the wealth industry is wealthier than it should be is information asymmetry.

“Most consumers can understand when one pot of peanut butter is more expensive than another, but financial services are complex.”

Stockspot’s point of difference is that it falls into a new category of ‘robo-advisers’. These are low-touch, automated, online portfolio managers. They use the same algorithms that get used by the industry (effectively cutting out the middleman).

“To build the platform we’ve built ten or even five years ago would have cost $100 million,” he continued. “I know a lot of banks have spent that amount of money in their investment platforms.”

The banks, however, are crushed with overheads in the form of networks and branches.

Sean Barrett, CEO of CurrencyFair (a currency exchange marketplace), said “The mood has been shifting for a while now, people now realise banks aren’t the only alternative to provide financial services and they do feel like they’re paying more than they should.”

CurrencyFair is essentially a ‘dating website’ for people who want to exchange currencies. It facilitates the transfers through local accounts on either side, thus avoiding the hefty bank transfer fees.

Since starting five years ago, the company has exchanged close to $3 billion, with an estimated saving to customers of $200 million. “We made it possible to send $50 or $100 to Ireland,” continued Mr Barrett. “It would normally cost you $50 to send $100 normally just in fixed charges.”

While CurrencyFair currently enjoys close to 100,000 registered users (30,000 in Australia) they still struggle against the reluctance of people to change.

“The banks have basically got people captured. There’s this lethargy which is probably one of our largest roadblocks – ‘my money’s in the bank so I just go and do everything with my bank’.”

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