An inaugural study has found that a bank’s perceived authenticity has a direct correlation with customers leaving and it could lead to trouble for the big banks.
The ‘J.D. Power 2019 Australia Bank Brand Authenticity Study’ found that one in five big bank customers were considering switching.
The study found a direct correlation between a bank’s perceived brand authenticity and the customer likeliness to switch.
The study gave the banks a Perceived Brand Authenticity (PBA) score on a 700-point scale with the big four banks scoring 461 while customer-owned banks had a score of 579.
Overall satisfaction in the big banks was 727 out of 1,000 which was below the average of 749 and almost 100 points below direct banks and customer-owned banks.
These scores were linked to customers saying they were likely to switch with only 5 per cent customers of customer-owned banks and 6 per cent of direct bank customers thinking of switching while 18 per cent of the big four customers were likely to switch.
Among customers, credibility was the biggest driver of how authentic the brand is, followed by brand relationship. On the other hand, history was the least important driver.
J.D Power’s head of global business intelligence Bronwyn Gill said the royal commission fallout highlighted the need to build a strong customer-first culture.
“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,” she said.
History was no longer enough for customers and the big banks had to demonstrate their authenticity in their customer relationships, said Ms Gill.
“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,” she said.
The study was conducted last year which could explain the difference in statistics between it and the latest Roy Morgan study that found satisfaction with banks was on the rise.
The big four banks had satisfaction levels of 75.9 per cent, up 0.6 percentage points since February which puts the banks almost back to pre-royal commission levels.
However, both studies still rate other banks higher than the big four with Roy Morgan finding that institutions outside the big four had a satisfaction of 83.3 per cent.
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