Small banks, new entrants come under scrutiny

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How small banks have responded to the royal commission and COVID-19 will be in the spotlight during a federal parliamentary committee hearing on Thursday.

The economic committee will hear from Bank of Queensland, Beyond Bank, HSBC Australia and ING Australia.

In addition, for the first time, the new banking players Volt and Judo Bank will testify about their operations.

The small banking sector has not faced the committee since the end of 2019.

Liberal MP and committee chair Tim Wilson said customer-owned and foreign banks operating in Australia were not immune from scrutiny.

He wants them to be held to account just like the big four banks.

“The committee’s review will include the progress of banks in implementing the recommendations of the Hayne Royal Commission on Malpractice in Banking, Pensions and Financial Services,” Wilson said.

Banks should also be asked about their response to the COVID-19 pandemic.

Mr Wilson said neobanks such as Volt and Judo Bank have the potential to stimulate competition in the banking industry.

Neobanks operate only online, usually through a smartphone app, and do not have the support of one of the Big Four banks.

“They have a long way to go and face many challenges, as we saw with the acquisition of 86: 400 and the closure of Xinja,” Wilson said.

The inquiry will also hear from the Australian Banking Association.

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