More than 2.1 million Australians are looking to switch banks within the next six months, according to research from data analytics company Nielsen.
Sixty-seven percent of that figure are big four bank customers, with 16% of them looking to change to a digital bank like ING, ME Bank or UBank. Research from Roy Morgan this week showed that bank satisfaction was 3.1% lower than before the Royal Commission.
Nielsen’s head of financial services and insurance, Jo Brockhurst, said that with open banking coming into effect this year, more consumers could start switching banks.
Open banking will allow consumers to own their data and have personal financial information easily accessible and transferable to other financial institutions, supposedly making it easier for consumers to compare and switch products.
Alongside advancements in technology, open banking has also encouraged the progressive rise of neobanks in Australia, such as Xinja, 86 400 and Volt.
Brockhurst said, “The trend towards digital banks is paving the way for neobanks to gain market share.
“While early adopters of neobanks have traditionally been millennials (age 18 to 35), their customer base has rapidly expanded from 18 to 80-year-olds for some brands in Australia.”
Eric Wilson, CEO of Xinja said, “Whilst you could argue that millennials are a core audience for neobanks, and they make up 41% of our audience, 36% of our audience is over 45, and 9% over 65.
“We believe it is just as much a question of mindset as generation. People are expecting a lot more than just ‘digital’ banks, digital is a given these days, what they are looking for is something that delivers an easy, frictionless and engaging experience, similar to those they have found in other next generation companies from other industries.”
Neobanks claim to put financial ownership in the hands of the consumer, allowing them to potentially obtain better deals on banking, credit cards and mortgage products.
Many claim to have shortened the process for home loans, as well as offer more tailored and valuable products to the consumer.
Brockhurst added, “Digital banks and neobanks offer an attractive solution, coinciding with a cultural shift to customers driving the agenda of how they want to bank and the recent Royal Commission.
“2019 will be an exciting year for the financial industry as customers are eager to engage with their banking needs in new ways.
“While the big four banks are seeking ways to improve future engagements, neobanks are at the forefront and growing their customer base daily.
“Time will tell if traditional banks are able to transition or if neobanks will eat away their market share.
“In the end, brand trust, simplified, easy-to-understand products and services, employee engagement and importantly, customer satisfaction will be the deciding factors.”