Lack of Trust Creates Customer Satisfaction Gap between Major Banks and Other Financial Institutions in Australia, J.D. Power Finds
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ING Ranks Highest amongst Financial Institutions (Non-Major Banks); Westpac Bank Tops Major Banks
SYDNEY: 4 Dec. 2018 — With recent concerns about transparency and customer retention weighing heavily on Australia’s banking industry, the Big Four banks are facing mounting challenges to deliver an enhanced customer experience. This is even more evident with the increasing availability of alternative banking providers, according to the J.D. Power 2018 Australia Retail Banking Satisfaction Study,SM released today.
The study finds that nearly half (42%) of Australian customers with major banks do not trust their bank, compared to a quarter (24%) of customers with other financial institutions who say the same.
“Traditionally, the bank-customer relationship is built on trust. When trust is compromised, customers may bank elsewhere, particularly when alternative providers are so readily available,” said Anthony Chiam, Regional Practice Leader, Financial Services at J.D Power. “Over time, as customers weigh their options, this will undoubtedly have a financial impact on banks. To compete in this new climate, banks need to go back to basics through both traditional and digital channel interactions, which will provide a more customer-centric experience and build brand loyalty.”
It is interesting to note that over one third (35%) of customers with major banks and a quarter (24%) of customers with other financial institutions did not receive clear information on items such as fees charged to their account. This further highlights the need for transparency and a clearer channel of communication. The study also finds that nearly one in five (18%) customers with major banks will likely switch from their primary bank in the next 12 months and a quarter (24%) would not recommend their bank to their friends and families.
Following are some of the key findings of the 2018 study:
- Lack of personal touch during interactions: In the past 12 months, 45% of customers who had a problem solved via the phone were not pleased with their overall experience. Nearly a quarter (23%) did not receive a simple “thank you” acknowledgement while visiting a branch.
- Banks need to offer relevant advice and prompt follow-ups: More than three-quarters (77%) of customers say they did not receive financial advice from their bank regarding relevant products, services or other financial needs. Similarly, three-quarters (74%) of Australian customers say they did not receive any follow-up communication on the products or services offered to them.
- Improve the customer experience with hassle-free digital platforms: The average use of digital platforms has grown during the past year with an increase of 14 percentage points in mobile app usage. However, half (48%) of customers do not completely understand which mobile banking products, services, or features are available to them.
- Customers open to branchless banking: Half of banking customers say they would stay with their bank even if it closed all physical branches (57% of Millennials vs. 47% of non-Millennials). Moreover, a quarter (26%) of Australian customers expressed their likelihood to bank with non-traditional financial institutions (39% of Millennials vs. 22% of non-Millennials).
ING ranks highest in retail banking customer satisfaction among other financial institutions (Non-Major Banks), with an overall satisfaction score of 864 (on a 1,000-point scale). ING achieves the highest score in four of the six study factors: product offerings; account information; account activities; and fees.
Westpac Bank ranks highest among major banks with a score of 731. Westpac Bank performs particularly well in the account information and account activities factors.
The 2018 Australia Retail Banking Satisfaction Study measures customer satisfaction with the products and services provided by their primary financial institution. The study measures overall satisfaction in six key factors: account activities (36%); fees (16%); product offerings (16%); account information (15%); facility (13%); and problem resolution (5%).
The study, now in its third year, is based on responses from 4,730 retail banking customers. The study was fielded in October 2018.
The study now also includes the Net Promoter Score® (NPS), which measures customers’ likelihood to recommend their bank to others on a 0-10 scale.
About J.D. Power in the Asia Pacific Region
J.D. Power has offices in Singapore, Bangkok, Beijing, Shanghai and Tokyo that conduct customer satisfaction research and provide consulting services in the automotive, information technology and finance industries in the Asia Pacific region. Together, the five offices bring the language of customer satisfaction to consumers and businesses in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, Taiwan, Thailand, the U.A.E. and Vietnam. J.D. Power is a portfolio company of XIO Group, a global alternative investments and private equity firm headquartered in London, and is led by its four founders: Athene Li, Joseph Pacini, Murphy Qiao and Carsten Geyer. Information regarding J.D. Power and its products can be accessed through the internet at asean-oceania.jdpower.com.
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