Retail Banking in Australia

The retail banking industry is located in what is broadly known in Australia as the Financial Services Sector. The Financial Services Sector is the official term used to encompass the industries of banking, insurance, superannuation, mortgage brokers, foreign exchange agencies and wool-broking. This ‘packaging’ of financial institutions within the broad category ‘financial services’ has taken place in Australia, as well as a number of countries, including the United Kingdom, United States, New Zealand and Japan (Knights and Tinker 1997). The grouping together of what many

would argue are fundamentally different industries is part of a neo-liberal economic agenda of deregulation aimed at breaking down traditional boundaries and intensifying inter-industry and international competition (Knights and Tinker 1997:

3).

In Australia this ‘packaging’ of these industries into the broad category,

‘financial services’, occurred during the 1980s when governments at both the Federal and State level sought to breakdown the traditional boundaries between organisations that up until that time were seen as operating in very different industries and market segments. The same structural changes occurred in the United Kingdom around the same time. Writers reporting on developments in both countries show how the main driver of this change came from the strategy of ‘deregulation’ (and essentially re-regulation) by governments pursuing an economic rationalist agenda (Hand 2001, Morgan and Sturdy 2000, Hodgson 2000, Kitay and Rimmer 1997, Burton 1994). In Australia, this blurring of industry boundaries and heightened competition has radically transformed not only the institutions themselves, but also what it means to be a financial services consumer. This has been particularly apparent in the retail banking industry where the very meanings of ‘customer’ and ‘customer service’ are constantly being reshaped.

Until the 1980s, the Australian financial system was heavily regulated, with exchange rate controls and limitations on bank products and interest rates (Hand 2001: 14). In Australia, the Campbell Committee, which was established by the Fraser government and which handed down its report in 1981, recommended significant restructuring and reduced regulation in line with similar developments overseas (Kitay and Rimmer 1997: 104). The deregulation recommended by the Campbell Committee was enacted by the Federal Labor government elected in 1983. One consequence of this changing regulatory framework was the removal of institutional and legal barriers between banking, building societies, credit unions, insurance and superannuation companies, and investment brokers.²

Hodgson (2000: 12) reports that in the UK these changes have “brought about an intensification of competition in all sectors”. In Australia similar structural and discursive changes have resulted in an increasingly competititve environment in some

2 The nature and effect of these changes are considered in detail in the following chapter.

areas of the industry. In retail banking, however, deregulation, rather than increasing competition, has resulted in Australia having one of the most concentrated retail banking markets in the world (Connolly and Hajaj 2001: 34). In the areas of small business banking and retail transaction accounts there is very little product differentiation, with these markets being dominated by four major banks: the Australia and New Zealand Banking Corporation (ANZ), the Commonwealth Bank of Australia (CBA), the National Australia Bank (NAB) and Westpac (Connolly and Hajaj 2002: 7).

The concentration of the retail banking market, which began with a series of mergers in the early 1980s, delivered a large share of the domestic market into the hands of the above four banks (Kitay and Rimmer 1997: 104). This market concentration was exacerbated by the privatisation of the government-owned banks in the 1990s. In 1990 government-owned banks held approximately one-third of the market. The Federal government-owned Commonwealth Bank was one of the four major domestic banks, while several banks owned by State governments had high regional profiles (Kitay and Rimmer 1997: 105). Subsequently, conservative governments began selling off publicly-owned enterprises, including the banks, and the buyers of these regional banks were, in the main, the existing large banks.

The concentration of the retail banking market and the limited number of suppliers and products now means that there is very little product and price differentiation between the banks. Kitay and Rimmer (1997: 106) indicate that, “for standard bank products such as savings, cheque and term deposit accounts and mortgages, the time taken to match a competitor’s initiative is often only a matter of hours”. While the banks claim to differentiate themselves from their competitors in terms of their customer service strategies, the customer service strategies of the four major retail banks appear to emphasise the same broad approach: fast, convenient service through technological innovation.

It is certainly the case that technological innovation in banking has changed the way that workers and customers in retail banking interact. The increasing number of technological service options available to retail bank customers has widened the space between worker and customer and altered the construction of time around banking.

For example, bank customers are encouraged to bank online (using internet banking) at any time of the day or night. The service interaction in retail banking is now very

often between the customer and a machine and the major banks in particular have introduced a range of disincentives to discourage customers from conducting their banking in person in branches. This has had quite profound consequences for the nature of retail bank jobs.

In the UK the extensive use of technology has transformed the bank employees’

role from servicing customers to proactively marketing and selling financial products.

Burton (1994: 52) has observed that “as a result of this reorganisation the tenor of the relationship between producers and consumers moves from one of politeness and support to an aggressive proactive battleground, with the customer as the sales target”

(ibid). Further, Morgan and Sturdy (2000: 37), also writing about the UK, report that the changing discourses and strategy around marketing and customer care in the financial services sector generally have required people working in the sector to see themselves as “‘enterprising actors’ in much more commercially driven and uncertain entities” (ibid). As we shall see, Australian retail banking has experienced a similar shift in focus from service to an emphasis on selling products.

In Australia, some smaller regional banks and credit unions, have sought to differentiate themselves from the large retail banks by claiming to offer customer service strategies based on service quality. They place an emphasis on localised, friendly, face-to-face customer relations. These smaller institutions provide the opportunity to explore whether these different discourses of the ‘customer’ result in different approaches to employment relations’ strategy and practice.³

The credit union and community bank case study organisations also provide the opportunity to explore in detail the extent to which different discourses of the customer and customer service strategies shape worker identity. They allow us to question how different the roles assigned to front-line service workers in these organisations compare to those working in the large retail banks, and to what extent these ‘new’ roles are embraced, accommodated, or resisted by workers.

3 Throughout the thesis, the broad term ‘employment relations’ is used to encompass the full range of structures, strategies and practices that shape the relationship between management and workers. In presenting the detailed evidence in relation to credit unions and community banks, this broad category is broken down into two sub-categories: ‘human resource management’ and ‘industrial relations’.

These sub-categories reflect the main aspects of the employment relationship in the particular case study organisations. For the purposes of this study ‘human resource strategy’ refers to four key processes: staffing and recruitment, training and development, performance management, and reward management. The term, ‘industrial relations’, refers to the external regulatory and institutional aspects of the employment relationship.