Kiwibank alternative for unhappy bank customers

KIWIBANK TOP ALTERNATIVE FOR UNHAPPY BANK CUSTOMERS

Support for Kiwibank has risen sharply over the past year, with the fledgling bank now the most popular alternative for New Zealanders unhappy with the service they’re getting from their current banks.

However, customers keen to switch to Kiwibank say the costs of doing so are prohibitive, according to the latest annual banking survey by The University of Auckland Business School’s Marketing Department.

Some 43% of New Zealanders support the concept of Kiwibank, compared with 31% a year ago. Kiwibank is now the bank of choice for a third of residential bank customers considering switching banks, pushing ASB Bank into second place.

Overall, residential customers are about as satisfied with their banks as they were a year ago, with an average approval rating of 68% (69% in 2001). The approval rating for business customers is slightly higher at 73% (71% last year).

Among residential customers of the major banks, ASB Bank (82%) and National Bank (78%) remain well ahead of the pack. The two have been the top-rated major banks (by residential and business customers) for the past five years. WestpacTrust (62%), ANZ (59%) and BNZ (57%) rank some distance behind.

Kiwibank came into being on the very day last year’s survey was released (November 5, 2001). This year’s survey represents the first opportunity to assess how bank customers’ views on the “people’s bank” have changed between concept and reality.

One of the survey’s authors, Marketing Department lecturer Andrew Parsons, says while Kiwibank is the bank that customers unhappy with their existing banks would most like to switch to, the complexity and costs of switching are prohibitive. “While many New Zealanders find the notion of Kiwibank attractive at a broad level, switching may prove more difficult for these than they think.”

T he Kiwibank’s supporters want to support a New Zealand-owned bank, notes Mr Parsons. All five major banks in New Zealand are foreign owned. Kiwibank’s next most attractive feature is its lower fees and charges.

The fifth version of this annual survey was undertaken between July and August 2002 by Mr Parsons in conjunction with former University of Auckland Business School colleagues Bodo Lang and Mark Colgate. The nationwide survey canvassed 1,178 residential customers and 1,444 business customers about their perceptions of banks in New Zealand and (for residential customers) their support and intentions towards Kiwibank. The response rate for residential customers was 21%.

SURVEY RESULTS

Residential Market – Customer Satisfaction

The five major banks in New Zealand (ANZ, ASB Bank, BNZ, National Bank and WestpacTrust) have a market share of over 90%. These five banks fall into two groups in terms of customer satisfaction – the top performers (ASB Bank and National Bank) and the rest (WestpacTrust, BNZ and ANZ). Of the smaller banks, TSB Bank rates very highly in this survey.

The survey’s results showed:

Overall, customer satisfaction among banks’ residential customers stayed level at 68% (69% in 2001)

ASB and National Bank are rated the top major (i.e. of the five large banks) retail banks in New Zealand, with 82% and 78% customer satisfaction respectively. These banks have been the top two for the past five years.

The three other major banks cluster together, some way behind the top two, with customer satisfaction ratings for WestpacTrust of 62%, ANZ 59% and BNZ 57%.

ANZ improved most from last year, with customer satisfaction rising from 53% in 2001 to 59% in 2002.

BNZ’s performance declined, with customer satisfaction falling from 64% in 2001 to 57% this year.

Outside the five major banks, TSB is still proving a strong competitor with growing market share and very high levels of customer satisfaction (97%) – 15% ahead of ASB.

Residential Market – Customer Switching

Customers’ switching intentions from their current bank go hand in hand with their level of satisfaction with that bank.

National Bank and ASB do not have much to fear. Only 10% of National Bank customers and 11% of ASB customers are considering switching to another bank.

Switching intentions at the three other major banks are significantly higher. Some 19% of BNZ and WestpacTrust customers, and 23% of ANZ customers, are considering switching.

Customer switching at TSB does not seem to be an issue with exceedingly low defection rates.

Residential Market – The Internet

Internet banking has made a giant leap forward in the past year, with the proportion of bank customers signed up for Internet banking nearly doubling from 26% to 49%.

Kiwibank

Support for Kiwibank has risen. Some 43% of New Zealanders say they support the Kiwibank concept with 40% opposed and 17% undecided. In 2001, the concept of a “people’s bank” was supported by 31% and opposed by 54% of survey respondents.

However, the number of people who say they would leave their old bank and switch to Kiwibank has fallen slightly to 13%, compared with 16% in 2001 and 40% in 2000. Some 76% say they would not switch and 11% were undecided. In 2001, 73% said they would not switch to Kiwibank and in 2000, 41% said that they wouldn’t change.

Kiwibank is now the bank of choice for those New Zealanders considering switching banks, pushing ASB Bank into second place. Currently 16% of residential bank customers consider switching banks. Of these 16%, Kiwibank is the most favoured (32%), followed by ASB (15%), National Bank and TSB (both 13%) and PSIS with 10%.

Business Market – Customer Satisfaction

The business survey questioned 1,444 New Zealand businesses about their banking loyalty and satisfaction.

Results of this survey showed:

ASB is the top performer in the business market with 84% of its business customers satisfied. A sterling 50% of businesses who bank with ASB say they are “very satisfied”, a result far ahead of any other bank (National Bank comes closest with 26%).

National Bank is a very good second-ranked business bank with a satisfaction rating of 82%.

As with the residential survey, the three remaining major banks in New Zealand cannot match the performance of ASB and National Bank. Their customer satisfaction ratings are substantially lower with WestpacTrust at 71%, BNZ at 69% and ANZ at 62%.

“Banks are working quite hard at maintaining the high levels that were achieved last year,” says Mr Parsons.

“The slump in customer satisfaction levels that was observed a few years ago seems to be behind us now which is good news for New Zealand businesses.”

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