Australian banks pay close attention to the average number of products their customers hold with them but the real test of cross sell success or customer loyalty should be based on what proportion of their customers’ products they hold. Currently the Big Four Banks on average hold only just under one third (32.0%) of their customers financial products, an increase from 28.8% in 2010. Potential products include Accounts, Cards, Loans, Insurance, Superannuation and Managed Funds. These figures are based upon the latest findings from the Roy Morgan Consumer Single Source Survey of approximately 50,000 people p.a.
Major Banks’ Cross Sell Performance
The average proportion of products, held by customers of each of the major banks, varies considerably, the highest currently is the CBA Group with 37.5%, followed by Westpac Group (32.5%), ANZ Group (29.9%) and NAB Group (28.0%).
Share of Big Four Customers’ Banking and Finance Products* Held at Bank
* Products include Accounts, Cards, Loans, Insurance, Superannuation and Managed Funds. Source: Roy Morgan Consumer Single Source, 6 months to May 2010 n= 24,558 and 6 months to 2014 n= 22,908. Base: Banking and Finance customers 18+
Since 2010 all of the major banking groups have made some gains in the proportion of their customers products held but the product area where gains have been made varies by bank. The ANZ Group has had its biggest gains in the proportion of its customers Mortgages held; the CBA Group has gained Mortgages, Credit Cards and Accounts, the NAB Group has improved in Accounts, Credit Cards and Mortgages and Westpac Group has gained in Insurance, Accounts and Superannuation.
Major Banks’ Competitors
Each of the Big Four banks faces considerable leakage of their customers’ business to other Big Four banks. For the ANZ and NAB, 19% of their customers products are held by other Big Four banks, compared to 15% in case of the Westpac Group and 12% for the CBA Group.
In spite of the vigorous competition waged between the major banks, numerically, the biggest competitors in terms of products for each of the major banks are other financial institutions and major insurance companies. Industry Superannuation Funds are also a major competitor across all of the Big Four Banks with around 4%-5% of products but greater share in terms of value. Credit Unions and Building Societies now only hold around 2% of the Big Four Banks customers’ products.
Share of Customers banking and Finance Products
Source: Roy Morgan Consumer Single Source, 6 months to May 2014 n= 22,908. Base: Banking and Finance customers 18+
Norman Morris, Industry Communications Director Roy Morgan Research says:
“While the Big Four Banks have made some small gains in product cross sell since 2010, overall they have not performed well. Reasons for this include lack of incentive for customers to consolidate, competition from specialists providers such as for superannuation and insurance, lack of product awareness, some concern regarding the spread of risk and staff that may not feel confident in a selling role.
“It is clear from the analysis that there is plenty of scope for these banks to increase their business from their existing customers rather than chasing new ones.”
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.
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