One in Four Big Four Bank Customers Considering Switching, J.D. Power Finds
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Customer-owned Banks Rank Highest in Perceived Brand Authenticity
SYDNEY: 28 May 2019 — The inaugural J.D. Power 2019 Australia Bank Brand Authenticity Study, released today, outlines a path forward for the financial services sector post the Financial Services Royal Commission, highlighting the importance for banks to demonstrate authenticity in their conduct with their customers.
Authenticity determines how well a brand is seen by its customers as truthful, relevant, honest and trustworthy. The study finds that three core dimensions—character, brand relationship and history/continuity—contribute to brand authenticity. Credibility/integrity which determines the character of the bank, is found to be the most important driver (56%) of how authentic the brand is, followed by brand relationship (29%) and history/continuity (15%).
The study found a strong correlation between customers likeliness to switch and their perception of the bank’s authenticity. Customer-owned banks and direct banks have the lowest share of customers saying they were likely to switch in the next 12 months (5% and 6%, respectively). Customers of the Big 4 Banks have the highest potential to switch (18%).
“The outcome and recommendations from the recent Financial Services Royal Commission highlighted the need for financial institutions to build a strong culture of putting customers first, in order to be more authentic to earn back the trust of customers and improve advocacy and loyalty,” said Bronwyn Gill, Head of Global Business Intelligence, Australia at J.D. Power. “Banks need to start demonstrating authenticity in their relationships with customers by acting with integrity in all of their customer interactions. It is no longer enough to rely on their history and the continuity of the relationship, as this only accounts for a small percentage of how the brand’s authenticity is perceived by customers.”
The findings also show that banks belonging to Customer Owned Banking Association (COBA) are perceived as most authentic, achieving a Perceived Brand Authenticity (PBA) score of 579 (on a 700-point scale). This reflects their focus in representing the needs of their members in the service, products and communication provided, as well as benefiting from a more community-based approach to banking.
The following are additional key findings of the study:
- Customers are more likely to recommend an authentic bank: Banks which rate strongly on PBA also have a higher Net Promoter Score®.
- More authentic banks have higher levels of satisfied customers: Banks belonging to COBA obtained the highest PBA score of 579 (out of a scale of 700) and the second highest overall satisfaction score of 811 (out of a scale of 1000).
Customer-owned banks rank highest in perceived brand authenticity (579) with an overall satisfaction score of 811.
The J.D. Power 2019 Australia Bank Brand Authenticity Study measures how authentic customers find their primary financial institution across predefined dimensions. The study is based on responses from 4,730 customers who were asked to rate their own primary financial institution. The study was fielded in October 2018.
J.D. Power’s PBA index rates Australian financial institutions from a minimum of 100 to a maximum of 700 index points. The study includes the four Australian bank segments covering 26 banks and measures responses across three key dimensions of character; branding relationship; and history and continuity. There are 12 attributes relating to brand authenticity: trustworthy; honesty; delivers value; customer first; moral; cares about customers; provides meaning to lives; reflects consumer values; connects with people; heritage; timeliness; and survives trends.
The study construct uses the work previously conducted by Professor Felicitas Morhart, et al., Brand Authenticity: An integrative framework and measurement scale. JCP 25, 2 (2015) 200-218. Professor Morhart, from the University of Lausanne in Switzerland, also advised on the question wording and attributes applied in the J.D. Power Australia Bank Brand Authenticity Study.
The study includes the Net Promoter Score® (NPS), which measures customer advocacy to recommend their financial institution to family and friends based on a scale of -100 to 100.
J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power has offices serving North America, South America, Asia Pacific and Europe.
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 Net Promoter, Net Promoter System, Net Promoter Score, NPS® and the NPS®- related emoticons are registered trademarks of Bain & Company. The approach classifies consumers into Promoters, Passives and Detractors, with the score calculated by subtracting the number of Detractors from Promoters.