Mozo pitches at penny-pinchers

After months in development mozo.com.au has launched to the Australian public, hoping to capitalise on the financial crisis and appeal to consumers looking to get a better deal.

Mozo - Compare Credit Cards, Home Loans, Personal Loans and More via kwout

Mozo competitor Ratecity scores banking products with Cannex star ratings. Mozo will instead rely on consumer feedback, and partnered with Roy Morgan to generate 3,000 initial consumer reviews and ratings of individual banks for the site.

Banks were rated on five categories: trust, customer service, convenience, product features, and rates and fees. Based on the initial batch of reviews Australia's favourite banks are Bendigo Bank, Members Equity, Bank of Queensland, Suncorp and BankWest. All regionals, and all at risk of, or already being swallowed up by larger competitors.

Probably the most unique feature of the site is the “Health check” tool that enables users to compare their existing bank products with those of competitors and work out whether they would benefit from switching.

Users can shortlist the products they are interested in and come back at a later stage when they are ready to purchase. Mozo will generate revenue from leads sent to financial institutions, and display advertising.

Mozo has also secured an Australian Financial Services Licence, making it easier for the group to compare and discuss deposit products – a definite advantage given the current strong industry competition for retail deposits.

The only obvious exclusion from the site is a discussion forum, something the journos behind fatcat.com.au have managed to pull off with moneyconfessions.com.au.

The combination of qualitative and quantitative data is a must in the current climate where consumers are seeking advice and perhaps a shoulder to cry on.

We’ll be watching the social networks closely to see if Mozo pops up.

A win for the little guy

The Federal Government’s move to guarantee all Australian bank deposits has been generally welcomed by the industry, with many commentators arguing it was needed to avoid a run on an Australian bank.

The guarantee is certainly good news for Australia’s second tier and mutual financial institutions which had been subjected to increased questioning from customers on their credit ratings and overall stability.

Despite credit unions and building societies falling under the same regulatory regime as their larger bank competitors, many consumers were under the false impression these institutions were less secure and that deposits with the major banks were explicitly protected.

The guarantee puts all ADIs on a level playing field and there’s even the chance it could save Suncorp from being eaten up by one of the big four, which would ultimately be a win for competition and consumers.

Credit unions have been telling Online Banking Review for some time that they are being questioned by customers seeking to know their credit rating, usually as a result of bank branch staff hoping to deter them from moving their funds to a competitor.

Credit ratings were not even on the radar of consumers shopping around for savings products until the credit crunch emerged and direct bank RaboPlus started marketing itself as “Australia’s safest bank”.

Until recently the Australian Bankers’ Association had always opposed deposit insurance, arguing it was costly and problematic, most likely because of the moral hazard issues it presents. Ultimately it means all financial institutions will come under increased scrutiny with regulators looking more closely into their investment practices.

So it will be interesting to see if any of the big 4 banks start using the guarantee as a marketing tool.

Following feedback from customers, RaboPlus moved quickly to add information about the guarantee to its site – nothing like a big red “guaranteed’ stamp to instill confidence.

High interest savings, term deposits, managed funds, online investments from RaboPlus via kwout

The Commonwealth Bank continues to heavily promote its “Determined to be strong in volatile times” brand messaging, but a quick glance of all the major bank’s websites shows no obvious references to the Government guarantee.

NAB’s new direct banking arm UBank has not added any reference to the guarantee, referring instead to the strength and “global capability” of its parent.

UBank - A good place for money - Backed by NAB. A direct bank with term deposit via kwout

mecu, one of the only Australian credit unions to have a credit rating, has added a fact sheet to it’s site (in their haste they spelt Government incorrectly), something likely to be replicated by more institutions in coming days.

Goverment Deposit Guarantee - Fact Sheet via kwout

Update: Citibank has also added a banner to its home page:

Citibank Australia via kwout