A new report has found that a lack of trust has created a customer satisfaction gap separating the major banks and other financial institutions in Australia.
The 2018 J.D Power Australia Retail Banking Satisfaction Study has found that an increasing availability of alternative banking providers have created more challenges for the big four banks.
Almost half (42 per cent) of Australian customers with major banks do not trust them whereas only 24 per cent of customers with other institutions said the same.
J.D Power’s regional practice leader of financial services Anthony Chiam said that because of an erosion of trust customers would start to look elsewhere.
“Over time, as customers weight 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,” Mr Chiam said.
The research found that 35 per cent of customers with major banks felt they did not receive clear information on items such as account fees.
The research also showed that despite a rise in digital platforms, almost half (48 per cent) of all customers did not understand the mobile banking products and features available to them.
Bricks-and-mortar branches are on the way out for customers, with half saying they would stay with their bank even if all the physical branches closed.
Millennials led the way for change with 57 per cent not caring if a bank had a physical presence and 39 per cent expressing a desire to bank with non-traditional financial institutions.
Non-millennials were not far behind, with 47 per cent sticking with a non-physical bank and 22 per cent saying they would likely bank with a non-traditional institution.
Overall, ING ranked the highest in retail banking satisfaction among the non-major banks and Westpac ranking the highest among the major banks.
ING achieved a score of 864 on a 1000-point scale to come first, meanwhile Westpac came in first for the majors with a score of 731 which was below the average of 776 scored by non-major banks.
Commonwealth Bank and ANZ both scored 728 while NAB fell below the major bank average of 727 with a score of 721.
The non-major banks which included institutions like Bank of Queensland, Bendigo bank, Suncorp and St George all scored higher than the bottom three majors.
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]