Scenario one: the overzealous teller
It is a long, hot summer afternoon in the Mudgee branch of Acme Bank, the only outlet within 50 kilometres. The only sound is the whir of a couple of ceiling fans vainly trying to stir the heavy air. Then the door creaks open and old Mrs Smith from the antique shop shuffles in, as she does every Thursday, to do her personal banking.
The teller is ready for her.
"That's a lot of money you have in your deposit account, Mrs Smith," she says.
"Have you ever thought of a term deposit? There's been a lot of discussion in the newspapers lately about the possibility of another interest rate cut. If you act today you can lock in 7 per cent for the next three years."
"No thank you. I like to know that I can get my money whenever I want to," replies Mrs Smith.
"We do have a range of unit trusts that will give you better returns. I can get you a prospectus if you like."
"I've never understood those and I'm not going to start now," Mrs Smith responds.
"Well at least you might like to think about a cash management account," the persistent teller says.
"With the sort of money you have on deposit, you could get yourself an extra 2 per cent in interest from the short-term money market."
Mrs Smith: "I like the sound of that. Tell me more."
Scenario two: the 24 hour call centre
Virtual Bank doesn't run branches any more (they're so last millennial). The bank is chasing high net worth individuals, so that's why it operates a global, 24 hour banking centre for its Golden Gladiator Account customers.
Using the phone or the internet, customers can not only do normal transactions but take out insurance cover, discuss the bank's recommended list of managed investments, or switch funds between cash management accounts and term deposits. They can even open a new account at 3am if they want to.
But retaining good staff at the telebanking centre is hard. Not everyone wants to work the 2 am to 6 am graveyard shift, for obvious reasons. It's a good thing there's a ready source of bright young people passing through Sydney on backpacker holidays from Europe. They're happy to do anything for a couple of months to get the cash for the next leg of their holiday.
All the bank needs to do is to give them a week's training, buddy them up with a more experienced operator for a fortnight and then they're ready to fly on their own, using templates and scripts provided for them online.
If any of the calls get really complicated they can always refer the caller to a financial planner next day, but of course, that's only a last resort. Your customer promise is `instant service, anywhere, anytime'.
The Financial Services Reform Act (FSRA) and associated policies that are being introduced by the Australian Securities and Investments Commission (ASIC) are set to put the provision of traditional (and not-so-traditional) banking services on a new footing.
FSRA is the outcome of the Financial Services Inquiry (the so-called Wallis inquiry) conducted in 1996-97. Among other things the inquiry's report recommended a plethora of licensing and disclosure regimes for different financial products be replaced by one regime, encompassing all financial products.
So far so good, as this is exactly what the financial services industry had been seeking. The industry, after all, had been characterised by the convergence of what had been disparate products and the rise of true financial conglomerates.
Banks, for example, now offer insurance, superannuation, financial planning and investment products all under the one roof, so why not put them all under one licensing regime?
Under FSRA, ASIC becomes the regulator of the conduct of all financial service providers. For banks, it means that in addition to their APRA …