Australian Banks Slow to Rebuild Trust; One-third of Customers Still Don’t Trust Their Primary Bank, J.D. Power Finds
Big 4 Banks Trail in Brand Authenticity as 18% of Customers Consider Jumping to New Bank This Year
SYDNEY: 27 Feb. 2020 — The J.D. Power 2020 Australia Bank Brand Authenticity Study, finds that there is only a slight improvement in how authentic banks are perceived to be by their customers from last year.
One year after the Royal Commission into misconduct in the Financial Services industry, broken trust is taking time to rebuild and hasn’t been helped by further scandals.
Authenticity for retail banks has improved only slightly compared with 2019, increasing by only 2 percent on 2018 figures.
“This stagnation suggests a continuing disconnect between banks and customers,” said Bronwyn Gill, head of banking and payments intelligence at J.D. Power Australia. “Despite banks undertaking new measures to improve their image post-scandal, it is clear these efforts are not resonating with their customers. Banks need to continue to work at building a culture of putting customers first. Without this focus we see dissatisfaction driving customers to neobanks and agile fintechs.”
While customer-owned banks, such as Heritage Bank and People’s Choice Credit Union, continue to have the highest authenticity scores, it is the Big 4 banks that have achieved the largest increase, up 5% from 2019. Despite this improvement, the Big 4 banks trail significantly behind other banks.
Credibility is the most important driver (56%) of a bank’s authenticity. It is also where customers see the biggest difference between the Big 4 banks and other banks. In particular, the Big 4 banks score low in the credibility and integrity factors of putting customers first, caring about customers and being true to morals.
Additional key findings of the 2020 study:
- Customer trust in banks improving slowly: Nearly one-third (31%) of customers do not completely trust their primary bank, down from 34% in 2019.
- Big 4 banks seen as having profit-driven focus: Customers of the Big 4 banks are more likely than the average bank customer to perceive their bank as profit-driven rather than customer-driven.
- Direct banks have most transparent fees structures: More than one-third (37%) of Big 4 customers indicate they do not find their bank’s fee structure to be transparent, significantly more than those of direct bank customers (9%) and customer-owned bank customers (14%).
- Pressure tactics still being cited for new account openings: The percentage of customers saying they feel put under pressure by their bank’s representative to purchase a specific product is 6%, down slightly from 7% in 2019.
“In order to improve brand authenticity, we recommend the banks go back to basics and put their customers first,” Gill said. “Moving away from a product-focus approach, banks need to engage customers in their interests and lifetime goals such as starting a family and buying a home. Striving for customer satisfaction overall, banks need to consider the long-term health and priority of Australians in order to gain back their authenticity in this market.”
Customer-owned banks rank highest in perceived brand authenticity (569 on a 1,000-point scale) with an overall satisfaction score of 800.
Heritage Bank rank highest in perceived brand authenticity (605) with an overall satisfaction score of 800.
Commonwealth Bank rank highest out of the Big 4 banks in perceived brand authenticity (489) with an overall satisfaction score of 749.
The J.D. Power 2020 Australia Bank Brand Authenticity Study measures how authentic customers find their primary financial institution across predefined dimensions. The study is based on responses from 4,834 customers who were asked to rate their own primary financial institution. The study was fielded in September-October 2019.
The J.D. Power Perceived Brand Authenticity (PBA) index rates Australian financial institutions from a minimum of 100 to a maximum of 700 index points. The study includes the four Australian bank segments covering 26 banks and measures responses across three key dimensions of character; branding relationship; and history and continuity. There are 12 attributes relating to brand authenticity: trustworthy; honesty; delivers value; customer first; moral; cares about customers; provides meaning to lives; reflects consumer values; connects with people; heritage; timeliness; and survives trends.
The study construct uses the work previously conducted by Professor Felicitas Morhart, et al., Brand Authenticity: An integrative framework and measurement scale. JCP 25, 2 (2015) 200-218. Professor Morhart, from the University of Lausanne in Switzerland, also advised on the question wording and attributes applied in the J.D. Power Australia Bank Brand Authenticity Study.
J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power has offices serving North America, South America, Asia Pacific and Europe.
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