Amidst ongoing concern over the state of competition within the banking sector and the bias of the Australian Banking Association (ABA), a new report has been released which sheds light on consumer behaviour within financial services in Australia.
The research, commissioned by the ABA and executed by Deloitte Access Economics, showed that 2.8m customers switched to new banks or financial providers for their home loans, credit cards and transaction accounts over the last year.
According to Anna Bligh, ABA CEO, the report confirmed that competition among the banks is strong.
“Whether you’re looking for a new home loan, a credit card or a transaction account, competition for a customer’s business is fiercer than it has ever been,” Bligh said.
However, broken down, the 2.8m figure translates to just 15% of everyday transaction account holders, 10% of credit card holders and 5% of mortgage holders switching banks in the 12-month period.
In fact, the majority of customers are satisfied with their bank product, with 79% of everyday transaction, 75% of credit card and 67% of mortgage owners saying they are ‘very satisfied’ or ‘satisfied’ with their providers.
According to the report, 23% of those surveyed indicated they were ‘actively searching’ for a mortgage.
When it came to their considerations in choosing a home loan, around 90% ranked factors relating to price – interest rates, fees and the ability to get a discount on the advertised rate – as either ‘very important’ or ‘important.’
Equally, 90% said the ability to make additional repayments was ‘very important’ or ‘important’ when it came to their choice of mortgage, with 84% also communicating that finding a bank that will give them the loan amount they need fell into the same two rankings.
Other highly valued considerations included home loans that provide a mortgage offset account, quality of customer service, user experience on the app or website and convenience of branches.
However, 74% ranked their loyalty or relationship with their bank as ‘very important’ or ‘important’, with just 26% indicating it would not impact their choice in mortgage product or provider selection.
Despite this, Bligh said, “The message to all Australians is if you aren’t satisfied with your home loan, credit card or other product it pays to shop around to get the best deal possible.”
Her message echoed that given by Treasurer Josh Frydenberg earlier this week.
“The best way for the banks to get the message is for customers - for Australian families, for Australian businesses - to seek the best possible deal and if they don’t get it from their existing credit provider, then to go elsewhere,” he said.