New research shows the 'hassle factor' helps Big Four banks hang on to unhappy customers
9 April 2014
CHOICE has released new research showing Australia's Big Four banks rely on perceptions that switching is 'too much hassle', despite lower levels of customer satisfaction.
CHOICE has released the nationally representative data in its submission to the Financial System Inquiry (FSI), and is calling for a several key reforms to put power back in the hands of customers.
"Across every product category we looked at – transaction and savings accounts, home loans and credit cards – the Big Four banks rank lower than their smaller competitors for customer satisfaction," CHOICE CEO Mr Kirkland says.
"This is obviously at odds with their overwhelming market share, and points to a lack of competitive pressure, where those businesses that perform best are not being rewarded.
"We believe the FSI is a chance to super-charge competition by putting power back in the hands of Australian banking customers and making it easier for them to choose the right product from the right provider," Mr Kirkland says.
In other key results:
- 58% of consumers surveyed by CHOICE agreed with the view there was a lack of competition in the services and offerings provided to them by the banking sector.
- An overwhelming majority of 89% thought it was important for the inquiry to focus on increasing consumer protection, closely followed by reducing credit card surcharges (86%), providing better information for bank customers (84%) and increasing competition (83%) and stability (83%) in the banking sector.
- CHOICE investigated barriers to switching, and found one of the most significant was the perceived 'hassle factor', identified by 36% of respondents overall.
- The 'hassle factor' was highest at 44& for those who considered switching transaction accounts in the last two years but stopped short, suggesting moves to streamline this process have not worked.
"This is a very important inquiry for Australia's future prosperity, and consumers are the single largest group impacted by financial services," Mr Kirkland says.
"We are calling for actions that make it easier for consumers to choose the right products, providing better information, and building on some of the protections that have proven so resilient during and since the global financial crisis.
"CHOICE believes that Australia's financial sector has a strong foundation, but without increased competition, driven by consumers, we will continue to see the major banks put their customers second when it comes to big decisions on interest rates," Mr Kirkland says.
CHOICE has made a total of 14 recommendations for the FSI to consider, ranging from competition, better information and consumer protection through to new technologies, superannuation and credit card surcharges.