The satisfaction level of personal banking customers in April declined by 0.1% point (to 82.8%) from March but remains just below the 20-year high of 82.9%. However the satisfaction of the highest value (top quintile) customers was the lowest of all groups at only 79.3%. This is a major issue, as this group accounts for 20% of the population but represents 62.7% of the total value of personal financial services in the market.
These are the latest findings from Roy Morgan’s Single Source survey of over 50,000 people pa.
CBA retains top spot of big four but “other banks” well ahead
Competition among the big four banks for top ranking remained close, with the CBA the leader in overall satisfaction on 82.2%. In terms of MFI (main financial institution) customer rankings, Westpac has top position with 83.6%, closely followed by CBA (83.5%), NAB (83.0%) and ANZ (82.0%).
Despite the improvement in satisfaction by the big four over the last 12 months (up 0.5% points), the other banks have retained a big lead, with the mutual banks increasing satisfaction by 3.3% points to 92.2%.
Consumer banking satisfaction
Source: Roy Morgan Research Consumer Banking Satisfaction Report, April 2015, average 6-month sample n=25,494.
Among the big four, Westpac was the most improved (up 2.5% points), followed by the ANZ (up 0.9% points). The CBA (down 0.4% points) and NAB (down 0.2% points) showed small declines. The housing loan customers of the big four increased their satisfaction by 1.7% points over the last 12 months, compared to an increase of only 0.2% points for other customers. Despite the low housing loan rates, the housing loan customers’ satisfaction with the big four remains below that of other banks’ customers.
High-value personal customers less satisfied
In the six months to April, the highest satisfaction level for the big four banks’ personal customers was among the lowest-value financial quintile at 85.9%, compared to 76.9% for the highest quintile. Since the highest-value quintile (20% of customers) accounts for 62.7% of total dollars in the market, and the lowest quintile accounts for just 0.3%, this suggests that the greatest growth potential and focus for achieving high satisfaction should be on the high-value group.
Consumer banking satisfaction by financial services quintiles*
Source: Roy Morgan Single Source (Australia), November 2014-April 2015, n=26,309
All four major banks receive much lower satisfaction ratings from their potentially highest-value customers compared to their low-value ones. Westpac has the highest satisfaction of the big four among both the lowest value (87.4%) and highest value groups (77.3%). The total mutual sector easily out-performs the big four with 91.7% satisfaction for the lowest value segment and 90.4% among their highest group.
High-value customers of smaller banks more likely to recommend them
With the highest value quintile accounting for nearly two thirds of the dollars (62.7%) in the market, it is important for banks to retain and grow this group. The extent to which customers in this segment are likely to recommend their bank to others (acting as advocates) has become a critical measure of success for growth and retention of customers.
The following chart shows that the highest-value customers of the smaller banks are much more likely to recommend their banks to others. Leading the way is Teachers Mutual (with 79.7% of their potential high-value customers likely to recommend them), followed by ME Bank (67.5%) and Bendigo Bank (64.7%).
High likelihood* of recommending bank by top-value quintile** customers
Source: Roy Morgan Single Source (Australia), November 2014-April 2015, n=6,181
Under half of the big fours’ customers in the top value group are likely to recommend their bank. The best performer was CBA (45.7% likely to recommend), followed by NAB (43.5%), Westpac (43.0%) and ANZ (42.2%).
Norman Morris, Industry Communications Director, Roy Morgan Research says:
“Banks have made good progress for well over a decade in raising overall customer satisfaction to record levels, from less than 60% in 2001 to over 80% currently. The challenge now is to improve the satisfaction and advocacy levels among the segments with the greatest potential.
“With the financial services market being highly skewed to the top end where the top 20% (or quintile) of customers account for 62.7% of the potential, it is crucial to understand the needs of this group.
“Firstly, banks need to focus on the satisfaction levels of the top quintile customers which currently rate lower than the overall population and well below the very low-value customers. The big four banks in particular need to improve satisfaction among this high value group if they are to match their smaller competitors.
“Advocacy is becoming an increasingly important measure of success for many banks but this must be considered against the customers’ potential value if the results are to be maximised. The fact that less than half of the high-value customers of the big four banks can be regarded as being high advocates for their bank is a major issue which needs to be addressed, as it is well below the levels of the smaller banks. Unless this is rectified, it is likely to limit the growth potential of the big banks, while their smaller rivals flourish.”
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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