Where does my money go?

Even though we use our bank accounts every day, it can be a bit of a mystery as to how banks actually work. So where does your bank invest your hard-earned savings?

  • 3 June 2020

    When you think about it, your bank accounts are far more than a convenient place to stash cash. Whether you’re currently tucking your funds away in a savings account, or even borrowing money for a home loan, you’re taking on a service that is being provided to you by your bank. 

    Australian money, $5. $10, $20, $50 and $100 notes.

    It costs money to provide that service to you, but how does this process work? Also, how do you know that your bank is reinvesting your money in causes that have a positive impact on the world?

    Where does a bank’s pool of money come from?

    If you have deposited money in your account, you’ve essentially lent money to your bank. At any given time, banks have less money available for withdrawals than the total amount deposited by their members. This is why you earn interest on the balance in accounts such as your savings or a term deposit.

    How are my savings used?

    The funds that you have deposited in your account are used in many ways, so that your bank can cover the costs of providing members with accounts. Some of these include:

    • Funding loans: This comprises the home loans and personal loans that are offered to customers. In saying that, customer deposits are not the only place banks get the funds that enable them to offer loans, but they do make up a large percentage of that pool of capital.
    • Lending to other banks: In the event that banks need a boost to their funds, they will lend each other money in the form of short term loans to ensure that they enough cash in circulation to effectively handle customer withdrawals.
    • Lending to businesses: This could be anything from a small start-up trying to grow their company, your local coffee shop, or a huge retail chain. In some cases, this can also include companies that are not forces for good (but more on this later).
    • Wholesale funding: This practice is when a bank holds cash from other banks and large organisations including the government. This enables a bank to provide additional funds for loans to their customers. 

    Does my bank’s investment strategy align with my values?

    This is a question you need to take some time considering the answer to. As time has gone by, individuals have become more invested in choosing service providers who are transparent about their ethical practices. 

    Some banks may choose to lend to organisations are highly profitable, but this might mean money is directed into activities that can be harmful to our planet, such as forestry or the fossil fuel industry.

    The banks out there who want to make a positive change in the world, are participating in what is known as the “clean money movement” which may align with your values. They responsibly invest in activities that make a difference in the world, such as: renewable energy and other climate solutions, global equality and social justice causes.

    What does UniBank do with your money?

    When you join UniBank, you can feel safe in the knowledge that your money is managed ethically and responsibly by a bank which invests in a better planet today and in the future.

    UniBank’s commitment to being a world-leading socially responsible bank, means that we will never invest your deposits in damaging industries, such as:

    • Fossil fuels and deforestation
    • Gambling, pornography, alcohol and tobacco
    • Correctional facilities, arms, military or political activity

    The Bank also has $1billion in certified ‘ethical’ wholesale funds. So when you take out a home loan with us, it is with money screened to exclude those same industries above.
    The best news is there are no extra costs to you for the peace of mind of investing responsibly.

    We’re proud to say that our have contributed to the Bank being recognised as one of the 2020 World’s Most Ethical Companies®. For the seventh year in a row. This evaluation by the Ethisphere Institute, the global leader in setting and progressing ethical business practices, recognises a high level of transparency, integrity, ethics and commitment to being a socially responsible bank.

    So as a UniBank member, you can feel good knowing that the savings you’ve put away for your future aren’t funding industries that put that future in jeopardy.

     

    Retail mortgages, deposits and Wholesale Debt Investment Programme and Short Term Deposits have been certified by the Responsible Investment Association Australasia (RIAA) according to the strict operational and disclosure practices required under the Responsible Investment Certification Program. See www.responsibleinvestment.org for details. The Responsible Investment Certification Program does not constitute financial product advice. Neither the Certification Symbol nor RIAA recommends to any person that any financial product is a suitable investment or that returns are guaranteed. Appropriate professional advice should be sought prior to making an investment decision. RIAA does not hold an Australian Financial Services Licence.

    ®“World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC. The World’s Most Ethical Company assessment is based upon the Ethisphere Institute’s Ethics Quotient (EQ) framework and honours superior achievements in transparency, integrity, ethics and compliance. Teachers Mutual Bank Limited  has been named one of the World’s Most Ethical Companies from 2014-2020, and includes subsidiaries Teachers Mutual Bank (2014-2020) UniBank (2016 - 2020), Firefighters Mutual Bank (2018 - 2020) and Health Professionals Bank (2020).

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