Wealth management still represents a growth area for the major banks, if only they can attract the right customers, according to new research released by Roy Morgan.
The research appears to counter analysis of the recent full-year financial results issued by the major banks, which pointed to lack-lustre returns from wealth management.
The research showed that the major banks were not actually gaining a significant “share of wallet” from their top quintile customers when it came to wealth management.
The analysis said that this low share of the wealth management wallet (including superannuation) among the top quintile customers was “proving to be a major drag on the major banks’ overall share of wallet”.
It said that among the big four banking groups’ top-quintile customers, the best performer in wealth management was the NAB with 17.1 per cent share, followed by the CBA group (14.2 per cent) and the Westpac group with 12.1 per cent.
Commenting on the research, Roy Morgan industry communications director, Norman Morris said the ability to increase cross-sell or share of wallet among the top finance quintile was critical [for the banks], because the segment accounted for nearly two-thirds of the value of the total financial services market.
“With the major banking groups all holding less than one-third of their most valuable customers’ wallet, there is obviously a great deal of growth potential. It’s concerning, however, that the four major banking groups have actually shown a decline in share of wallet among this high-value group over the last four years,” he said.
Morris said it was mainly in the wealth management sector where the major banking groups were having the least success with the top-value quintile, getting a share of wallet of less than one-fifth.
“Overall, it appears there is a lack of loyalty to the major banking groups, particularly in the highest-value segment,” he said. “Several factors are behind this, including competition from specialist providers, low awareness of some products’ availability, lack of incentive to consolidate, and the need to spread the risk.”
