Voluntarily Enslaved

Just like somebody trapped in a bad relationship which they fear to stay but cannot leave, Australians continue to dislike the big four banks yet flood to them for comfort.

Combined, the big four banks currently hold over three quarters (76.5%) of the value of all outstanding mortgages, up from 73.7% a year earlier and 68.3% in 2008.

The retail deposit story is the same, with the big four currently holding 72.7% of this funding goldmine, up from 72.5% a year earlier and 71.4% in 2008.

In dollar terms, the big four hold $850 billion of the total $1.1 trillion in mortgages outstanding, and $380 billion of the $522 billion in retail deposits.

Yet CoreData’s most recent Net Promoter Score (NPS) research, which reports the opinions of Australian retail banking customers, has the big four banks taking up four of the bottom five places of the 16 banks reviewed, (combined credit unions and combined building societies were included in the analysis).

ING Bank topped the NPS scores, yet just a 2.0% increase in retail deposits to $16.6 billion was recorded for the year to June 2010, with mortgages equally lacklustre, increasing 4.4% to $36.6 billion for the same period.

This compares to the combined big four mortgages outstanding jumping 12.0% and retail deposits 9.0%, from a book base more than 15 times bigger than ING Direct.

The inverse correlation between NPS and retail banking market share continues for the year to June 2010.

ME Bank has the second highest NPS, yet the mortgage book increased by less than 1.0%, and although retail deposits jumped 20.0%, this was from a very small base.

Combined building societies and combined credit unions NPS’ ranked in the top five, with their mortgage books increasing by 10.0% and 11.0%, and the retail deposit books by 5.0% and 6.0% respectfully, indicating these institutions’ NPS results are some indication of potential new customer acquisition numbers.

The NPS analysis included the Bankwest and St George brands, which both received a higher ranking than their parents.

While the NPS is an excellent gauge of retail banking customer opinions, the inverse correlation between market share and scores identifies the most preferred banking options are failing to meet the needs of customers wanting to break their embrace from one of the big four banks, and find a new banking love.

Data taken from CoreData’s latest NPS Retail Banking Tracker Report, the CoreData Australian Mortgage Report Q3 and the CoreData Australian Cash Report Q3.