Australians now hold an average eight financial products across four different institutions, compared with seven products across three institutions at the time of the last Federal Financial System Inquiry in 1997, as revealed in our latest State of the Nation report. With this increase, Main Financial Institution (MFI) consideration by customers has never been more important.
Roy Morgan Research asks Australians (14+) which of their institutions is their main one—and it’s their choice: it may be where the day-to-day account is held, or the home loan, or the one holding the largest share of their money (or debt). Perhaps it’s where they’ve had a relationship the longest, or get the most satisfaction.
Banks get added value from high rates of MFI selection among their customers. The choice both reflects and increases customer loyalty, engagement, satisfaction, advocacy and, of course, cross-selling potential.
Knowing this, all the major banks have worked hard to increase their MFI share in the last four years, despite increased competition. The CBA Group (excluding Bankwest) continues to have the highest proportion of customers regarding it as their MFI at 75.8% in the 12 months to February 2014, up a proportional 2.4% since 2010.
Proportion of each bank’s customers who identify it as their MFI:
Source: Roy Morgan Single Source, average annual sample n = 50,557 Australians 14+ with a financial relationship
The Westpac Group (excluding St. George Group) ranks second with 65.4% of its customers identifying it as their MFI (growing 3% in the period), and the ANZ Group is third with 58.8% (growing 1.2%).
Although the NAB Group trails with just 57.1% of its customers nominating it as their MFI, this is the highest proportional growth of the Big Four since 2010, at 4%.
Of the non-majors, ING Direct experienced a growth rate of 78% over the period, from 8.2% to 14.6% of its customers now identifying it as their MFI.
Satisfaction among MFI customers is the highest ever reported for the major banks. In the six months to February 2014, CBA had the largest proportion of satisfied MFI customers at 83.6%, a growth rate of 12% on the result four years ago. NAB is now at 82.8% (growing 14%), ANZ at 80.4% (growing 3%) and Westpac ranks fourth at 79.9% (growing 8%).
Proportion of each bank’s MFI Customers who are Satisfied:
Source: Roy Morgan Single Source, average six-month sample n = 24,702 Australians 14+ with a Main Financial Institution
Norman Morris, Industry Communications Director – Roy Morgan Research says:
“All the major banks have done a good job at improving relationships with their customers, with a greater share nominating each as their MFI. In addition, financial institutions are also working hard to ensure these highly profitable and engaged customers are satisfied with the overall relationship.
“This could make it more difficult for some of the other players in the market to increase their MFI share. However, as we can see with ING Direct, there is potential for gaining traction in this market.
“With the help of current technology, it is a lot easier for customers to compare rates, products and services for all institutions based on their financial needs and requirements. It is therefore increasingly important for financial institutions to understand their current customers and their requirements and tailor products, services and special offers accordingly.
“With the help of intelligent market insights, a targeted approach and the use of the right marketing medium, some of the smaller institutions may be able to increase their MFI share.”
Roy Morgan Research
Roy Morgan Research is Australia’s best known and longest established market research and public opinion survey company.
Roy Morgan Single Source is thorough, accurate, and provides comprehensive, directly applicable information about current and future customers. It is unique in that it directs all the questions to each individual from a base survey sample of around 55,000 interviews in Australia and 15,000 interviews in New Zealand annually - the largest Single Source databases in the world. The questions asked relate to lifestyle and attitudes, media consumption habits (including TV, radio, newspapers, magazines, cinema, catalogues, pay TV and the Internet), brand and product usage, purchase intentions, retail visitations, service provider preferences, financial information and recreation and leisure activities. This lead product is supported by a nationally networked, consultancy-orientated market research capability.