Embargoed until 00:01 Monday, 24 April: According to a new study released today by CommBank Kaching, the average Australian borrows more than $200 from their nearest and dearest every month, equating to over $1.6 billioni. This billion dollar exchange between friends, family and colleagues is being dubbed the ‘Australian Informal Borrowing Network’ (AIBN).
The biggest contributor to the AIBN is ‘unforseen or emergency situations’, with just under half (49 per cent) indicting this is their most common reason for borrowing. However, for others simply ‘running out of money before payday’ (26 per cent), ‘never having enough cash’ (24 per cent) or ‘convenience’ (22 per cent) provide the reasons behind their informal borrowing needs.
Interestingly, the study shows big differences in the value of informal borrowing networks between genders, age groups and locationsii:
When it comes to our preferred informal lenders, the ‘Bank of Mum’ firmly tops the list with the majority of Australians saying they would be most likely to ask their mum if they needed to borrow $50. Australian mums are also the most likely to be lending money on a regular basis with the average Australian asking to borrow money from their mum 1.72 times a year.
Australians increasing reliance on informal borrowing networks has led to an explosion in the uptake of mobile payment methods, including CommBank Kaching – a revolutionary new mobile payment app – which has seen more than 235,000 downloads in a matter of months. The new smartphone application allows consumers to make instant peer-to-peer payments removing the need for long-term informal loans.
“Our research shows that millions of Australians rely on informal borrowing networks for emergencies or short term loans. Recent innovations in smartphone banking, such as our Kaching application, mean Australians consumers can make instant payments to friends and family using their favourite communication channel,” said David Lindberg, Executive General Manager Cards, Payments and Retail Strategy.
“From paying a work colleague for a coffee via their email address, to splitting the cost of dinner with friends via a Facebook® friends payment, CommBank Kaching fuses peer-to-peer payments via text, email and Facebook to give Australians more ways to make safe, secure payments to their friends and family.” continued Mr Lindberg.
Getting into debt-iculty with mates
Although it seems Australians are more than happy to lend each other money, when it comes to repaying informal loans the study paints a slightly different picture.
Despite the majority (85 per cent) of Australians claiming that they were brought up to always repay their debts, almost half (49 per cent) have experienced disagreements when it comes to paying loans back and a surprising one in five (20 per cent) Australians have actually lost friends over lending and borrowing money.
However, many disagreements over informal loans may be down to simple human error and lack of access to social banking tools. While the majority (76 per cent) of Australians agree that they would ideally get their cash back instantly, more than half (52 per cent) admit that it’s difficult to pay people back if they do not have enough cash on them.
With nearly than two thirds (60 per cent) of Australians now wishing that there was a way to pay people back on the spot without replying on cash, applications such as CommBank Kaching, which enabling mobile payments via Near Field Communication (NFC), email, mobile and Facebook, and the ability to check and transfer money between accounts, look set to become increasingly popular.
“We all know that borrowing money from friends and family can be the cause of disagreements, whether that’s over the amount or best way to pay someone back. CommBank Kaching is a significant leap forward in how we pay and receive money from each other. It brings speed, convenience and importantly money to our informal borrowing networks, giving Commonwealth Bank customers more ways to instantly pay and receive money than any other bank,” said Mr Lindberg.
If consumers want to find out more about CommBank Kaching, or download the app, please visit: www.commbank.com.au/kaching
Notes to editors:
About the research:
About Commbank Kaching
Adoption is simple. Existing Commonwealth Bank customers with a NetBank login can be up and running in minutes following installation of the free app from the App Store. Once the customer has selected an account to both receive and make payments from, Commbank Kaching will enable them to pay anyone via MasterCard® PayPass™, an email address, phone number or Facebook friendship. Depending on the format selected for payment, the transaction will either take place instantly, or generate a unique code for delivery to the recipient, allowing them to access their payment online at a convenient time.
Commbank Kaching harnesses near field communication (NFC) technology, a first for mainstream banks in Australia, allowing payments of up to $100 to be made by a simple tap of a phone in retailers with MasterCard® PayPass™ enabled terminals. Users wishing to activate the NFC functionality of Commbank Kaching will need to use an iCarte cover, which is available for purchase during the app installation process.
i All monetary figures have been calculating using weighted data and the latest population estimates sourced from the Australian Bureau of Statistics
ii All monetary figures have been calculating using weighted data and the latest population estimates sourced from the Australian Bureau of Statistics