The growing trend towards digital banks and the introduction of open banking legislation this year could see the big four banks lose out to ‘neobanks’ like Xinja and Volt, new research from data analytics company, Nielsen, shows.
The research showed over 2.1 million Australians were looking to switch their major financial institution in the next six months, and just over two-thirds (67 per cent) of those were big four bank customers.
Sixteen per cent of big four bank customers were looking to change to digital banks, which represents a five percentage point increase from June 2017 to June 2018.
Head of financial services and insurance, Jo Brockhurst, said with open banking legislation coming into effect in July 2019, consumers would have more choice, which would see a further increase in consumers changing banking providers.
Open banking would also see a rise in neobanks, which have traditionally attracted millennials, but Xinja’s chief executive, Eric Wilson, has reported 36 per cent of the neobanks audience is over 45, and nine per cent is over 65.
“We believe it is just as much a question of mindset as generation,” he said. “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.”
Brockhurst said while the big four banks were seeking ways to improve future engagements, neobanks were at the forefront, and were 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.”