The latest findings from Roy Morgan’s single source survey, which is based on in-depth interviews conducted face-to-face with over 50,000 consumers, have revealed that the average number of Australians using bank branches has dropped by 27.2 per cent over the past four years.
The release of Roy Morgan’s results follow on from comments made by ANZ CEO Shayne Elliott in his appearance before the financial services royal commission.
Counsel assisting the royal commission Rowena Orr QC questioned ANZ’s decision to close approximately 110 branches over the past decade and, according to Mr Elliott, 35 branches over the past 12 months, which MS Orr alleged has reduced accessibility to banking services, particularly for customers in remote and regional communities.
However, Mr Elliott told the commission that he had questioned whether the services offered through a branch network could be offered more efficiently through the provision of technology or through other “avenues”, making specific reference to home loan origination via the broker and mobile banking channel.
The ANZ CEO added that the branch network is “not a terribly efficient” or “well used” avenue for home loan origination.
Conversely, the Roy Morgan survey also found that consumers are increasingly using mobile banking services, with the use of such services increasing 62.2 per cent over the same period.
According to Roy Morgan, internet banking remains the most popular banking channel with 47.1 per cent of consumers using the service. However, the popularity of internet banking has declined from 52.3 per cent in 2014.
The survey also found that phone banking is declining, with its use down to 13.6 per cent from 16.1 per cent in 2014.
Reflecting on Roy Morgan’s survey, industry communications director of the research firm Norman Morris observed: “The switch to mobile banking has been a result of rapid technological change, reinforced by high satisfaction levels with this relatively new way of dealing with banks.
“Satisfaction with mobile banking is the highest of all banking channels with 89.2 per cent, compared to branches with 85.7 per cent. And, as a result, it is likely to be contributing to the increasing preference for mobile banking.
“Declining use of phone banking is likely to be partly as a result of it having the lowest satisfaction rating of all the major channels with only 77.4 per cent.”
Further, the research revealed that nearly two-thirds (63.4 per cent) of millennials use mobile banking, compared to only 19.8 per cent using branches, with millennials making up 36.4 per cent of the total mobile banking market, compared to generation Z (26.3 per cent) and generation X (24.6 per cent).
However, Roy Morgan noted that branches still play an important role among older customers, with approximately 38.1 per cent of pre-boomers and 29.8 per cent of baby boomers using them over an average four-week period.
“The strong preference for mobile banking by millennials is a result of them having grown up with technology, compared to the older generations who have been brought up only using branches,” Mr Morris added.
“As millennials get older, however, their financial needs are likely to become more complex, and so they may also require some type of personal contact, possibly involving a branch.”
Moreover, the Roy Morgan research found that the preference for mobile banking increases with household income, reaching a high of 63.4 per cent for those where household income is $150,000 per annum or over, compared to only 25.3 per cent where household incomes are under $40,000 per annum.
However, Roy Morgan noted that despite the fact that the use of mobile banking rises rapidly with income, branches are still used by around a quarter (23 per cent) of consumers in households with incomes of $60,000 per annum or more.
Mr Morris concluded: “The idea that with increased complexity and incomes that there is still likely to be a role retained for branches is shown by the fact their use remains fairly consistent for all those with household incomes over $60,000 per annum, despite their increased use of mobile banking.”