By Brendan Trembath for AM
Forrest Gump said life was like a box of chocolates – Westpac has its own homespun philosophy as it tries to justify its higher interest rates.
Westpac has sent its customers an email with an animated video which explains that borrowing money is like the cost of bananas.
Banana prices soared in 2006 when crops were devastated by a cyclone. The bank’s banana approach has baffled marketing experts.
The video clip shows an animated figure with a watering can, tending to two tall banana trees. The narration begins like all good children’s tales.
“Once upon a time there were big lush fields of banana crops, but one day a terrible storm rolled in and hit the banana fields,” the narration goes.
“So the crops were damaged and there were not enough to go around. Because of the devastating storm, the price of bananas went up and it cost more to make a banana smoothie, that’s why the price of smoothies increased by 50 cents. The end.
“We all understand this story right? A plus B equals C. But the same formula seems so much harder to understand when it comes to talking about money, about lending, about mortgages and about banking.
“In some ways a bank is really just like the company that sells banana smoothies, a bank is a business that buys and then sells something, only in the bank’s case, that something is money.”
The video clip was sent to customers on Monday night by the bank’s retail chief Peter Hanlon. It is an attempt to justify the bank’s recent decision to increase interest rates for customers with variable mortgages.
The increase was nearly double the Reserve Bank’s 0.25 percentage point official cash rate rise.
Neither Mr Hanlon nor his boss, chief executive Gail Kelly, were available for an interview. But a Westpac spokeswoman says the bank had honourable intentions and that the aim of the video was to simplify a complex issue. She says there has been positive feedback from customers.
‘Condescending’
But the bank’s approach is being questioned by some marketing experts. Dr Paul Harrison is a senior lecturer in marketing, advertising and public relations at Deakin University.
“It’s a very wacky way of trying to convince people that rate increases are justified. From my perspective it actually looks condescending and patronising and, probably for most of the consumers who are living with the rate rise, it will feel that way as well,” he said.
“I think one of the things that they do, is at least they admit that they’re a business and for a long time consumers have looked at banks as being something akin to a community service, so there’s a bit of honesty in there.”
Dr Harrison says people may view a story book approach as over-simplifying a complex issue.
“I think because this is very complex, people recognise that, and a story book approach doesn’t really help people to understand what’s going on.”
Jim Macnamara is a professor of public communication at the University of Technology Sydney. He says the consumers will be the ultimate judges.
“You could say, in one positive sense, it’s trying to explain why its costs have gone up, but on the other hand it depends on whether the people believe that message and whether they find that credible,” he said.
“I mean it’s a long stretch between bananas and money, so it’s up to public whether they find that a reasonable explanation of interest rate rises.”
This morning Prime Minister Kevin Rudd joind the fray, calling on Westpac to “have a long hard look at itself”.
“What Westpac has done in most recent times in terms of lifting rates beyond that which is being indicated by the Reserve Bank is frankly the wrong thing,” he added.
“Customers out there should be looking at where else they can do their banking.”
Nova programmers sound strangely upbeat about the resignation of Tim Ross from the breakfast program. They say it’s a chance to reboot the brand, shake up the market and have a real tilt at winning Sydney. Even allowing for spin, it makes one suspicious that it was the outcome they wanted.
Tim ‘Rosso’ Ross and Merrick Watts have rejected rumours they’ve had a rift, saying they love each other like brothers and will continue to work together outside radio.
