Customer loss should give banks pause
More than a million customers have ended their relationship with a financial institution in the past year, with ANZ reporting the highest proportion among the major four banks, according to Roy Morgan Research.
The Single Source report, based on more than 50,000 interviews conducted each year, found that 855,000 people had stopped dealing with a bank, 18,000 with a building society, 65,000 with a credit union and 140,000 with some other financial institution.
Around 4 per cent (157,000) had stopped dealing with ANZ, followed by Westpac (3 per cent), Commonwealth Bank (2.7 per cent) and National Australia Bank (2.3 per cent).
Commanding the largest customer base in Australia, CBA lost the most customers at 192,000.
Among the smaller banks, 5.6 per cent (46,000) of Bankwest's customers ended their relationship with the provider, followed by ING Direct (5.2 per cent), St George (3.8 per cent) and Bendigo Bank (2.9 per cent).
Roy Morgan industry communications director Norman Morris said banks need to understand why customers are choosing to deal with other institutions, pointing to recent Roy Morgan research which found that the key reasons for customers wanting to make a switch were high fees and charges, poor service and uncompetitive interest rates.
"While tracking and benchmarking the proportion of lost customers is an important measure, it is interesting to note that the potential value of these lost relationships will vary across the banks," he said.
"For instance, the potential lost opportunity on people who stopped dealing with CBA is the 7.9 financial products they hold anywhere, compared to 8.7 products by those who ended their relationship with ANZ and 10.7 products held on average in total by lost Bankwest customers."
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