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Bank satisfaction falls following royal commission and rate hikes

Satisfaction with the banks has dropped to a six-year low, driven by interest rate uncertainty and revelations of misconduct identified by the financial services royal commission, according to the latest Roy Morgan research.

The findings from Roy Morgan’s Customer Satisfaction – Consumer Banking in Australia June report, which comprises face-to-face interviews with 50,000 bank customers a year, has revealed that customer satisfaction with banks dropped to 78.3 per cent in June, the lowest recorded satisfaction level since April 2012.

Customer satisfaction with the banks was at 82.3 per cent in January (before the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry started), but this has been falling consistently since the commission hearings began in March. In May, bank satisfaction fell to 78.5 per cent, with the latest report showing that this has now dropped further to 78.3 per cent.

Correspondingly, customer dissatisfaction has risen to its highest level since April 2012, rising from 4.6 per cent in January to 6.2 per cent in June. Further, the Net Promoter Score (NPS) also declined over the same period, falling from 0.49 to -4.03.

Speaking of the findings, Roy Morgan’s industry communications director, Norman Morris, said: “It is not surprising given the continuing level of negative publicity involving banks and the royal commission, that satisfaction with banks, NPS and customer advocacy are all showing a similar negative trend over the last six months.”

Mortgage holder satisfaction declines

Mr Morris also claimed that a “major contributor” to the fall was a drop in satisfaction among mortgage holders, which dropped to 75.7 per cent in June, a year-on-year decline of 4 per cent.

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He attributed the fall in satisfaction among home loan customers to changes, or potential changes, to interest rates.

Over the past few weeks, several non-major lenders — including Macquarie Bank, AMP, ING, Bank of Queensland, Heritage Bank, Auswide Bank and Homeloans — have announced out-of-cycle increases to their variable rate home loan offerings, with the major banks also expected to follow suit.

“Declining satisfaction among home loan customers is a major contributor to the overall decline in customer satisfaction and is likely to be as a result of either increased rates or talk of rates being increased,” the industry communications director said.

“This is likely to be having a negative impact in an environment where there hasn’t been any increase in the official cash rate by the Reserve Bank for a considerable time.”

Bendigo Bank’s home loan customers most satisfied

The Roy Morgan research also found that when assessing satisfaction among home loan customers across the largest mortgage lenders, Bendigo Bank customers were most satisfied (89.5 per cent). Indeed, the analysts have previously found that Bendigo Bank is the third most trusted brand in Australia.

Mortgagors of Bankwest were the second most satisfied (81.9 per cent), followed by St. George Bank (81.0 per cent), Suncorp (80.4 per cent), Westpac (73.7 per cent), ANZ (73.4 per cent), Commonwealth Bank (73.2 per cent) and NAB (71.9 per cent).

However, in the six months to June, satisfaction among Bendigo Bank’s home loan customers reported the sharpest decline (7.4 per cent), followed by NAB and St. George (5.3 per cent), Commonwealth Bank (5.1 per cent), Westpac (3.4 per cent), Suncorp (3.2 per cent), ANZ (2.5 per cent) and Bankwest (0.5 of a percentage point).

Non-mortgage customers at Bendigo Bank were also most satisfied (87.5 per cent), followed by Bankwest (84.4 per cent), St. George (83.9 per cent), Suncorp (80.0 per cent), Commonwealth Bank (79.2 per cent), NAB (78.3 per cent), Westpac (77.0 per cent) and ANZ (76.8 per cent).

In total, 15.5 per cent of respondents were indifferent about their relationship with their bank.

In conclusion, Mr Morris noted that while satisfaction was falling, the general sentiment remains above historic levels.

“Despite the declines in satisfaction and advocacy, they remain above historic levels, but the potential impact of continued negative publicity represents a major challenge for banks,” Mr Morris said.

[Related: Customer satisfaction with banks continues to decline]

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