Roy Morgan research has discovered that the big four banks have increased personal customers by over five per cent – above population growth by 0.3 per cent, meaning the banks are doing well.
Personal customers include anyone over the age of 14, with the increase representing over a million Australians since July 2011. NAB is doing a fine job of retaining and attracting customers, with a growth in personal customers over the past four years sitting at 16 per cent, followed distantly by the Commonwealth Bank (CBA) (including BankWest) with five per cent, then Westpac (including the St George Group) at three per cent.
While simply counting the customer growth is valuable, the researchers have also established the various segments where the growth is occurring most frequently – or infrequently as the case may be. The gains in each segment based on value that customers hold across different financial products and providers was analysed, with products including loans, debts, accounts, wealth management, and superannuation. These segments have been split into quintiles, five equal groups.
Quintile 5 = 20 per cent of the population, but 63 per cent of total market value of financial services. Since 2011, the biggest increase in customer numbers in this quintile was NAB (9.2 per cent), then ANZ (up 8.8 per cent).
Quintile 4 = 25 per cent of total market value of financial services market. Gains were seen across the board here, with NAB again taking the top spot (up 15.4 per cent), then CBA (up 8.8 per cent).
Quintile 1 = less than one per cent of total market value (at 0.3 per cent), with NAB showing the greatest growth (up 32.5 per cent), then CBA (up 5.8 per cent), then Westpac (up 5.4 per cent).
So why has NAB done so well?
Norman Morris, Roy Morgan Research’s industry communications director, says that ‘The strong NAB result in terms of customer growth is likely to be as a result of the “ break-up” campaign that started in 2011 with a combination of cutting fees, aggressive home lending and focus on improving customer satisfaction which had been lagging well behind their peers. Since that date, customer satisfaction increased to rival the big four leader, the CBA. We have seen that this campaign appears to have increased customer numbers across all segments but with the greatest growth being in the lowest value segment (probably as a result of reduced fees ), this represents a potential issue for customer profitability.’
Morris also states that the big four banks have done a great job at increasing customer numbers, but the issue at hand now becomes figuring out how to grow the customer base in those areas that present the greatest profit potential. This is the top 40 per cent of customers who represent the top 90 per cent of market value, as these customers tend to spread their money out between institutions in contrast to lower-value customers who do all their banking with one provider.