A person depositing their savings into the bank account receives a small percentage back from the bank in return for entrusting them with it. The good bank can then lend a large part of this deposit as a loan to someone who wants to buy a house, for example, and it profits by charging them more interest than it has to pay to the person who deposited the money in the first place.
If this is the proven business model, how do they differentiate themselves? Well, it’s what they do with the margin they make to create financial products that separate them.
This is a huge myriad of offerings, which includes the website where you can do online banking, the design and usability of the phone apps, the payment terminal services or mortgage packages, and even the number of brick-and-mortar branches, which makes it accessible for the locals.
This is just the retail sector, which includes everyday banking for people like you and me. There’s also the business sector, where Australian bank accounts provide the same financial services to businesses looking to buy new assets, make large transactions, and track and control all business expenses for a larger service fee.
Finally, the last business unit is institutional lending, financing even bigger companies like large global corporations or government entities to fund large public projects.
Also, all the best banks in Australia have a New Zealand division, and even though it isn’t technically a business division because it’s a country, it does get treated as a separate business entity in terms of its operations.
Best Banks in Australia (Full Overview)
Choosing the best bank is difficult with so many options. Many Australians wonder: which is the best bank Australia has to offer? This uncertainty may lead to hesitation or dissatisfaction when you don’t get the service that meets your expectations. Find a bank that offers excellent service and is aligned with your financial goals, whether for saving, investing, loans or daily transactions. Many banks claim to be the best ones in Australia.
This comprehensive guide on the top 10 Australian banks will cut through the clutter. We have taken into account a number of factors, including the customer service experience, product offerings, digital experiences and overall reliability. Whether you need robust business banking services or a user-friendly personal bank, our list will provide a detailed analysis to help you decide which bank is best for you.
Most banks and accounts will bill a modest fee when you use your account in Australia. Australia’s banking sector is often considered one of the most successful in the world. Australia has fostered a mixture of traditional banking institutions, as well as fintech startups. Each is striving to become the best bank in Australia. This diverse banking system ensures residents and businesses have access to financial services that are tailored to their specific needs. As demand for seamless, technology-driven banking grows, so too does competition among banks as they compete to win the title “best banks of Australia.”
Big 4 Recommended Small Banks Australia
We’re going to look at the big four top Aus banks to be with the mid-tiers, the neo- and digital best Australian banks, and finally, the non-bank lenders. That is, CBA, Westpac, NAB, and ANZ. Now, these four banks dominate the Australian market. They have the most lending and the most customers.
They have many branches that you can physically visit, and they’re diverse in the products they offer and the tech they have online. So, these Aussie banks are typically heavily audited and have tight lending restrictions.
You might have noticed if you’re going for lending with your homeowner or an investor that they’re looking at your expenses and your serviceability in quite a lot of detail at the moment.
Now, the real reason to go with these big banks is their system and backing, and everyone perceives that they’re almost too big to fail. In any event, the banks will typically be propped up by the government.
So it’s very unlikely that if you take a loan out from one of the big banks, it’s likely to be foreclosed on, which means you would have to pay the bank back and potentially fire-sell your property.
One of the great things about these banks is the systems and assurance that they can provide you. If you’ve been a longtime follower of our channel, Emily and I have typically dealt with CBA. They’re Australia’s biggest bank, and we love CBA over Westpac, NAB, or ANZ because of their digital platform. Their net banking platform is world-class. It’s easy to navigate, and you can have unlimited offset accounts against your home loans.
We’ve just found their system and infrastructure to be the best. As I’ve dealt with the other banks’ online platforms, CBA has shown through the crowd, and that’s also returned to their share prices.
You know, being a great bank and turning great profits for themselves. So, when it comes to being a lender and dealing with the bank, the most important thing here is to get a lending specialist who understands your situation.
Now, we’ve been very lucky at CBA, and we’ve had great contact with a lending specialist who’s been there for over ten years. Her name’s Sarah, and she shouldn’t call CBA or ask for Sarah.
Thousands of people work for this bank. The most important part here is that you find a lender and a lending specialist that’s the bank if you’re going to deal with them directly, that listens to your situation, analyzes all the numbers, and gives you real feedback as to what you can do in terms of taking the next steps.
There’s nothing worse than dealing with a lender, giving them all of your information, and getting mixed responses about your lending capacity around what information you need to provide.
It was when we dealt with our lending specialist directly; we got the answers quickly as long as we turned and provided the information soon.
We typically offer our information within 24 hours. CBA was outstanding in service and fairly competitive in interest rates. Let’s talk about interest rates with the big four banks. They will typically slowly decrease their rates and quickly increase them as interest rates rise. The big banks will not be the cheapest in terms of interest rates, but they’re also not the highest.
They know that most people want to join them and use their lending services, so they’re in the middle of the market regarding interest rates.
The great thing we found is that they’re more flexible in terms of products, so it might be an advantage to go with one of the big four banks. So, if you’re looking for assurance and it’s your first or second investment purchase, look at one of the big four banks.
Mid tier Banks Australia
Suppose you’re just a bread-and-butter homeowner looking to purchase your first investment property. Let’s jump into the mid-tier banks australia. This is the second section of banks, and it’s not one of the big four, but it’s a well-known institution. Examples are the Bank of Queensland, Suncorp, Bankwest, Heritage, and Macquarie.
They have some brand names but don’t sit up with the big four. Why would you look at one of these mid-tiers and dress like an ING or a Suncorp?
The real reason is that they give you better serviceability if you’re looking to invest and buy an investment property or easiest bank with them, so they already understand your history.
Finally, individual banks are slightly better than the other banks in one lending aspect. I’ll give you a few examples. So, the Bank of Queensland is well known for having great bank branch managers to whom you can go in and talk personally. So you’re not used to digital banking or dealing with everything online or over the phone, and you like face-to-face contact.
So, the Bank of Queensland might be better for you to talk to a branch manager, sit down, and review the paperwork there. Another example is Bankwest, which is known to have better lending capacity. Ban West is a subsidiary of CBA, but Bank West might have better lending capacity, which means you can borrow more money and make a larger investment purchase.
Heritage is more of an older bank, and they still deal with paper, so they do not use online forms and signatures, so beware of that. But Heritage has been known to help maybe unoccupied get into the property market. So, if you’re unoccupied, Heritage is a better bank. As an investor, they are more limited in their lending capacity, but if you have unique circumstances where you’re on casual income or part-time wages, or you’ve just gone to full-time, sometimes these banks can be more flexible.
Now, I also want to throw credit unions into this level of banks. So, there are a lot of banks mid-tier banks and credit unions that fall into this category. There are too many to name on this list, but the real takeaway from talking about these mid-tiers and credit unions is that they can help you based on your situation.
So chat with a mortgage broker for their opinion, or research online and look at the mid-tier banks and credit unions that can help you. Interest rate is one of many factors you need to worry about. You need to look at how the bank can give you a certain product and how they can give you a certain you may be interest-only period or help you get from your second to your third and fourth property if you’re looking to grow an investment portfolio.
It’s all good to get your first loan and be happy with it, but if it cuts you at the knees and doesn’t allow you to get more lending, then it’s not the right investment loan to go for you in the first place.
Digital Banks Australia
Now let’s jump to stage three regarding our good banks in Australia, namely, neo and digital banks. So, digital banks have been on the rise in the last few years, and they’re tailored towards homeowners and owner-occupiers with a very simple structure. Now, I’m going to put a warning out there. If you’re an investor looking to grow an investment portfolio, these banks are typically rigid in their serviceability and understanding of your financial situation.
You might jump through a few of the questions that they ask up front and have a chat with a lending specialist online or fill out the forms in this case because they’re neo banks, so you typically don’t get much phone interaction and once you jump through a few hoops you might find out that due to their lending restrictions, they want bread and butter homeowners. They’re not looking for people with three, four, or five investment properties because that complexity is difficult for the bank to manage.
They typically want simple loans. Italian banks are best for you if you’re a homeowner looking for a great rate dig. In this situation, these digital banks typically look for LVRs that are lower than 80%, and I know Athena as an example. As your LVR lowers and you pay more off your loan, the interest rate also falls. Lots of these new and digital banks are offering crazy interest rates at the moment, around the 1.9 or 1.8% mark for owner-occupiers who have, say, a leverage an LVR or leverage-to-value ratio of 65% or less.
Now, the interest rates will creep up the higher your LVR is, so if you’re getting towards the 80% mark, you’re going to be paying market rate and a bit higher interest rates, but this might be the pick for you if you’re looking for a digital experience you can send them your bank statements and send them your information and your ID all online, sign the docs all online and get your application approved within a matter of weeks assuming you’re a simple situation.
If you’re more complex, these banks need to be corrected for you, and let’s look at the final category in our banking tier list, which is the best for investors who have hit their lending capacity. So, that is non-bank lenders here in Australia.
Non Banks
we’ve gone through the big four banks, gone through mid-tiers, and looked at neo-slash digital banks. The final banks in my tier list are not banks at all. They’re non-bank lenders, which means they’re typically private lenders with a pooled fund and lend that out at a higher interest rate. The most popular ones here in Australia are First Mac, Liberty, Latrobe, and Pepper Money, typically the big four players in the non-bank space.
They’re non-bank lenders because they have fewer lending restrictions, which means they can offer higher serviceability. In layperson’s terms, in simple English, they can give you more money to buy an investment property than a big four bank or a mid-tier bank typically could. Now, you’ve got to be careful here. Only take on that debt if you’re comfortable with the investment you’re buying and the cash flows.
So, although you have greater lending capacity, this is great if you’re comfortable with debt and assets. Still, it can be risky if you’re an owner-occupier looking to get their first property and have struggled with a big four bank or a mid-tier bank and decided to go with a non-bank lender to get into their first home.
These guys typically charge a lot higher interest rates than your average bank, so an average bank could be charging, you know, mid to high twos or low three percent at the moment, and these banks could be these non-banks, I should say, could be charging anywhere between four to six percent depending on your circumstances.
You can also do different types of loans with these banks like you can with the big banks in low-doc loans, which will allow you again to reach more capacity in your borrowings. Now, how I’ve structured our property portfolio, and this is where the real gold is if you’re going to take anything away from this article, is work with the big four and the mid-tier banks.
So, typically, the big four banks will have the tightest lending capacity and restrictions on what you can borrow. Once you’ve maximized your capacity with the big four banks, look at the mid-tier banks and see if you can get more lending through those parties. Then, look to move to the non-bank lenders, which will have the highest interest rates but the maximum lending capacity.
The reason you want to do this is because of the comfort and assurance you get by starting at the top of the tree with the big four banks and then working your way down to slightly higher risky lenders with higher interest rates to grow your property portfolio over time as you become more of an established investor or what they call a professional investor in some capacity. You get a greater understanding of your debt and your equity and how to manage your cash flows. So that’s a massive breakdown of the banks here in Australia.
Top online bank accounts in Australia
Have you ever wondered if there’s a bank account that can offer you zero monthly keeping fee, no ATM withdrawal fee both in Australia and overseas, no fee for international transactions, and a year account that can provide you with a competitive interest rate? With 76 financial institutions that offer the best everyday accounts, I have filtered three of them, and let me share them with you today.
Not surprisingly, these would not be the big four banks, and there might be banks that you have never heard of, but don’t worry. I ensured that the banks I’m going to mention are covered under the financial claim scheme, which protects the bank holder up to $250,000 if the bank goes under. I initially narrowed it down to nine bank accounts and further reduced only three on the list.
UBANK
The first bank account is UBank USpend, a division of UBank. It’s like a relationship between Jetstar and Qantas Airlines. However, UBank is an online-only bank with no ATMs or branches. The good thing about being a digital bank with no fees in Australia is that they normally offer a competitive interest rate and low fees. This USpend transaction account cannot be opened on its own.
It has to be added to its U Save savings account, and the Visa debit card supports Apple Pay, Google Pay, and Samsung Pay. The mobile app offers sweeping technology that automatically moves money between these two accounts to ensure you have enough to pay your regular bills and stick to your savings goal—the requirement to enjoy the maximum variable interest rate of 1.1% is easy. You need to deposit $200 monthly into either of these two accounts, and there’s no withdrawal or balance requirement.
ING
The second bank account is the ING Orange Everyday Best Transactional Accounts, which was highly recommended by the Barefoot investor Scott Pape in his books. ING has become the most recommended bank in Australia with 2 million customers, which accounts for 8% of the population. And ING is a wholly owned subsidiary of the multinational Deutsche Bank ING Group.
You must meet two criteria to have your international ATM fees refunded to your best current account and have zero international transaction fees. First, you have to deposit $1,000 monthly into the account. And second, you have to make five settled purchases every month. You can link this Everyday Transaction Account to a savings account called ING Saving Maximizer. It currently offers 1.35%, the highest interest rate I came across.
To enjoy this maximum variable interest rate, you need to meet the above two criteria mentioned earlier and grow your balance of this savings account from the month before. And this amount can be even 10 cents or $1. This interest rate is very competitive. However, it’s only applicable to $100,000. If you have a larger balance, this may not be the option that you’re looking for. And there will be some changes from the 1st of December 2021.
The good news is that ING will introduce a 1% cash back on eligible utility payments, gas, water, and electricity made via BPAY or direct debit account number, not the card number. And the rebates on international transaction fees are still unlimited. And, of course, to enjoy this benefit, you still need to deposit $1,000 monthly and make five settled monthly purchases. I use this orange card, which is pretty good. I barely withdraw cash from ATMs nowadays. And even if I do, for example, go to the market, five times should be enough.
HSBC
These open bank account deals ticked the first four criteria, but the savings account interest rate could be better. It offers a 2% cash back on tap and pays purchases under $100 up to $50 cashback per month when you deposit $2,000 monthly. Second, this card is a great travel debit card when you head overseas because it allows you to hold up to 10 different currencies, and you won’t be charged fees on purchases made overseas in the shop or online.
You can link this transaction account to the savings account, which currently offers 0.25%, which is low, but I don’t recommend it. I deposit $2,000 into this bank account every month. Because I track our living expenses, I know how much we’ll pay monthly. So, in the end, I transferred some cash back to my ING bank account. There’s a small tip on this 2% cash back because to enjoy this cashback, any tap-and-pay purchases must be under $100.
Commonwealth Bank of Australia
Commonwealth Bank, a multi-national bank, has branches in New Zealand and Fiji as well as the US, UK, Asia, and Australia. Sydney is the headquarters of this bank, which was founded in 1911. Around 51,800 employees work for the bank, and it operates over 11,000 branches. It offers products and services in retail banking, business banking, institutional bank, and wealth management for its 16.6 million customers.
Australia New Zealand Banking Group
Founded in Australia in 1835, ANZ Bank offers a variety of financial and banking products to its retail, small business, corporate and institutional clients. Wealth Australia, a division within the bank, is made up of Insurance and Funds Management, two business units that offer insurance, superannuation, and investment solutions.
Westpac Bank
Westpac Bank became Australia’s very first Bank in 1817 when it was founded as the Bank of New South Wales. It was renamed Westpac Banking Corporation after BNSW merged Commercial Bank of Australia. It provides financial services and banking products through five subsidiaries: Consumer Banks, Business Banks, BT Financial Groups, Westpac Institutional Banks and Westpac New Zealand. About 32,620 bank employees are employed by the company. Westpac has its headquarters in Sydney. It serves over 13 million customers.
Macquarie Bank
Macquarie Bank has its head office in Sydney and is Australia’s biggest investment bank. The bank, founded in 1969, offers services across the debt, equity and commodities markets in asset management, finance, banking and advisory. Macquarie Bank, with its headquarters in Sydney, employs 13,597 employees.
Bendigo Bank
Bendigo Bank was created in November 2007 by combining Bendigo Bank with Adelaide Bank. With approximately 7,200 employees, the bank is Australia’s largest retail bank. Bendigo is the headquarters, but it has offices in Adelaide, South Australia and Ipswich (QLD), as well as regional offices located in Docklands, Melbourne and Ipswich.
AMP Bank Ltd
Sydney-based AMP Bank employs more than 6,000 staff. AMP Bank has a broad range of services that include deposits, mortgages for residential properties, products from self-managed retirement funds, practice finance loans and transaction banking. The Bank has been a leader in wealth management for Australia and New Zealand.
Suncorp Bank
Suncorp Bank in Australia and New Zealand offers services such as general insurance, wealth management, banking and life insurance. Brisbane was the birthplace of Suncorp Bank, which was established in 1902. Suncorp Bank serves around nine million Australian and New Zealand customers and employs approximately 13,500 people.
Bankwest
Bankwest is a rural lender that was founded in Australia’s state in 1895. The Bank was created to help support agriculture in the state. Agricultural Bank became a trading institution in 1945. Bankwest was renamed in 1994 after it was incorporated in 90. The Bank of Western Australia is based in Perth. It also has branches in Adelaide and Brisbane.
