Tier Two Tears

The knock on effect of weak new customer growth for Australian regional banks has severely impacted their ability to increase their lending books.

The underperformance of the regionals relative to the majors during the financial crisis in acquiring deposits makes it difficult for these institutions to remain price competitive with the major banks.

Irrespective of the so-called ‘flight to safety’ some regionals are themselves making the task all the more difficult according to new research.

Bank of Queensland and Bendigo Bank received the lowest customer experience scores, rated by retail consumers in the market when applying to open a transaction account, new CoreData research has found.

Yet the poor first contact experience although was not limited to regional banks, with overall only one in ten customers actively seeking a new transaction account making the decision to change banks, due to a lack of any discernable benefits.

The defining point is that banks consider opening a transaction account as a low value task, with customers considering the opposite, as this is often their first step in a new banking relationship.

Bank of Queensland and Bendigo Bank received the lowest scores for Initial Contact in a relative sense across the eight banks reviewed, scoring a ‘Poor’ rating, represented by an average score in the bottom third of all responses.

Performing well were the big banks, with Commonwealth Bank, National Australia Bank and Westpac Bank receiving an ‘Average’ rating, or scoring in the middle third.

The best performers were Bankwest and St. George, now subsidiaries of Commonwealth Bank and Westpac Bank respectfully, along with Australia and New Zealand Bank (ANZ), scoring an Initial Contact rating of ‘Good’, or results in the top third of all responses.

A second major customer acquisition indicator is branch staff knowledge, represented by the Sales Experience measure, with the smaller banks again struggling.

Bank of Queensland and Bendigo Bank were again ranked in the bottom third, with Bankwest, National Australia Bank and St. George scoring an ‘Average’ rating.

Commonwealth Bank and Westpac Bank, Australia’s two biggest banks, received the highest rating for Sales Experience.

A potential new Bank of Queensland or Bendigo Bank customer is already unhappy with their banking experience so far, but this is further compounded with the lack of interest in the final stage of the customer acquisition evaluation, Competing for the Business, with both banks yet again rated ‘Poor’.

Commonwealth Bank also underperformed scoring the same result for this category, with the banks new subsidiary Bankwest outshining the parent, recording a ‘Good’ rating.

Big banks ANZ and Westpac Bank also received the highest rating, with National Australia Bank and St. George recording ‘Average’.

Superior service was one competitive advantage smaller banks operating in Australia had maintained over the big four historically, with the relative performance results from the CoreData study indicating this may no longer be the case.

Research quoted was sourced from the CoreData Transaction Account Review 2009, based on over 160 mystery shopping customer experiences for eight Australian banks, with a minimum of 19 shops per bank.