Consumers look beyond banks

A study by the independent research house Datamonitor has found an increasing number of Australians prefer alternative over traditional financial institutions.

Financial analyst at Datamonitor Anna Large said 5 per cent of Australian consumers, including high-earners and the well educated, have been turning to new or smaller players since the onset of the financial crisis two years ago.

“New entrants in particular who are peddling ‘simpler, no strings finance’ stand a better chance of capturing these consumers who are largely disengaged as a result of a general lack of understanding surrounding complex financial products offered by the bigger institutions,” said Large.

She said these one million consumers constituted a big market for the new players entering the banking industry and it was up to them to communicate their offering effectively.

Highlighting the lack of education as a long-term problem for the financial services industry, Large suggested banks, schools and governments start educating people about banking from an early age.

“Creating a lasting relationship with consumers from childhood, that can be sustained over their financial lifetime, will reap long-term benefits for the industry and consumers as a whole,” Large added.

Some Australian banks have already taken steps to tackle this problem, with the Commonwealth Bank launching an online game called ‘Coinland’, aimed at primary school children.