Can you trust banks and lenders?

6 minutes

Trust in financial institutions is at an all-time low. According to new data from Finder, trust in the Big 4 banks fell from 62% in April 2021 to 52% in October 2021. This same research found that trust in small banks and lenders was currently sitting at 65%. Given that around half of the Australian population lacks confidence in their bank or lender, here are our tips on what to watch out for.

What is a non-bank lender, and are they safe?

A non-bank lender is a financial institution that can offer loan products like home loans and even credit cards but don’t have an Authorised Deposit-taking Institution licence and are therefore not eligible to offer stand-alone deposit accounts. Non-bank lenders comply with the same consumer credit rules and regulations as traditional banks under the National Consumer Protection Act 2009. They’re also regulated by the Australian Securities and Investment Commission (ASIC).

So, are non-bank lenders safe? Yes, as long as you do your homework. When researching loan options, ensure your potential lender doesn’t raise any red flags listed below.

How to tell if you can trust a lender. Here are 4 red flags to watch out for

With RBA interest rates at a record low, buyers have rushed to take advantage and refinance their home loans. If you’re buying your first home, or extending your investment portfolio, comparing offers from different lenders is a great place to start. With each lender setting different rates, criteria, and fees, it can be challenging to know which one is the best for you. The good news is there are certain warning signs to look out for.

1. Lack of public information

The first nod to trustworthiness is transparency. In the digital age, you shouldn’t have to worry about ringing up a lender to find simple details such as the home loans they offer, rates or fees. All information should be readily available — not hidden amongst the fine print. Lenders who expect you to haggle over the phone or in-person to negotiate a better rate are withholding their best deal. Nano offers new and existing customers the same great rate.

2. Lengthy application and approvals process

In this current market, when you find your dream home, it is essential to act quickly. To secure a home loan, typically you’ll need to fill out an application form and submit documents supporting your financial situation, including your income, expenses, assets and liabilities only for it to be manually reviewed over weeks if not months — this can leave you at risk of missing out on making an offer or bidding at auction. With online lenders like Nano, you can get approval in minutes, not weeks. The application is quick, straightforward and can be completed on mobile or desktop — anytime, anywhere.

3. Unnecessary fees

If there’s one thing banks love, it’s fees. Account fees, monthly fees, early exit fees, application fees, settlement fees, and offset or redraw fees are all ways that traditional lenders recoup high overheads.

However, without the need for physical branches and the associated costs of maintaining them, smaller lenders are able to keep costs down and pass those savings onto their valued customers. Nano proudly has no hidden fees for on both our home loans and our Visa debit card. Government charges and terms and conditions do apply.

4. Attention-grabbing offers

A low-interest rate isn’t always a good thing. Be wary of honeymoon periods or cashback deals that entice you with a lower rate or seemingly good deal only to sting you with a higher interest rate in a few months. Although you may save on interest for the first few months or years of your home loan, when the honeymoon rate period ends, you may find yourself locked into an interest rate that is not as competitive in the broader market. Make sure you always look at the comparison rate to see what you’re really signing up for, which is a true representation of the true interest you will pay, including fees and charges.

Three features of a reliable bank or lender

Home loans usually take years to pay off, so why commit to 30+ years with an untrustworthy lender? Home loans are long-term, so what may seem like small differences in interest or fees can really add up in the long run. A good lender is on your side, providing you with the flexibility to pay off your loan faster and smash your financial goals. Here are some characteristics and features of a good home loan deal.

1. Transparent rates

It’s simple — honest lenders will advertise their best rate. There’s no need for lengthy phone conversations or ultimatums. Avoid paying the loyalty tax that sees you penalised with high interest rates for staying with your lender for many years. At Nano, both new and existing customers get the same great rate, no questions asked.

The best part? Thanks to our commitment to a new (better) way of lending, we are able to reduce our operations costs, and instead of putting those cost savings back into our balance sheets, we share this with our customers through our great rates, with no Nano fees.

2. Smart tools

Aside from the convenience, smart home loan features can help you streamline your loan and help own your home faster. With Nano, you can centralise your finances using the offset sub-account, where every cent reduces the interest you pay. It’s also connected to a Nano Visa debit card for purchases, with options for Apple Pay, Google Pay, BPAY and instant bank transfers.1

3. Self-service

Stay in control of your home loan and avoid spending hours on hold just to manage your finances. Look for a lender with a mobile app to help manage your loan; not only will it help streamline your bill-paying processes, but it will also give you complete transparency and visibility over your home loan and spending. The Nano App uses visualised data to help you understand and track spending with optional notifications, allows you to categorise transactions and see details, and shows you your interest rate in real-time. There are also great new features that will continue to be added to help you live your best financial life and get ahead fast.

What happens if your bank or lender goes bankrupt?

One of the most frequently asked questions about online and new lenders is what happens if it closes down or goes bankrupt? Without a proven track record, new lenders may appear a riskier choice than well-established banks. The good news is that this is incredibly unlikely to happen.

Unlike small businesses that come and go, smaller lenders must apply for an Australian Credit Licence, backed by the National Consumer Credit Protection Act. In the absolute worst-case scenario where a lender closes its doors, your loan would be transferred to another lender with the assistance of your existing lender. After that, you’ll continue to make repayments just as before.

Still unsure?

Taking out a home loan or refinancing can feel daunting but by partnering with the right lender, you can rest easy. We’re proud our customers have given us a score of 4.8 on TrustPilot and have been blown away by the speed, ease and reliability of new lenders like Nano, including Craig who said, “This has to be the easiest and quickest process of refinancing that I have experienced and cannot praise Nano Home Loans enough.”

Our mission is straightforward — to provide financial services for our customers based on the principles of simplicity and clarity. If you’re tired of the opaqueness and want more transparency with your home loan, it may be time to consider a refinance. Visit our refinance calculator to see how much you could save on your loan by switching to Nano today.

Make a smart money move. Refinance now.


  1. The Nano Card is issued by Hay Limited ABN 34 629 037 403 (Australian Financial Services Licence 515459). See terms and conditions.