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Personal banking customers flock to NAB

With Australia’s big four banks enjoying an increase of just over one million in their number of personal customers in the four years to July 2015, one of the majors has clearly dominated the battle for attracting new customers.

According to Roy Morgan Research, the big four banks saw a 5.5 per cent increase in the number of personal customers aged over 14 years – a rise of 1,042,000. By comparison, this was above the rate of population growth between July 2011 and July 2015 at 5.2 per cent.

The data showed NAB as the standout beneficiary of this growth, with the number of personal customers climbing 15.7 per cent. The others grew in single figures, with CBA (including Bankwest) up 5.2 per cent, ANZ growing 2.7 per cent and Westpac (including the St. George Group) growing its personal customer base by 2.5 per cent.

The figures were separated into quintiles based on the value of customer holdings. Unsurprisingly, overall growth was most heavily concentrated with the highest value of holdings. Despite accounting for just 20 per cent of Australia’s population, the banks posted a combined 63 per cent rise in the number of customers in this space.

It was NAB which posted the biggest gains in all areas regardless of the value of customer holdings. Its highest percentage increase was in the number of lowest-value customer base (up 32.5 per cent), although substantial gains were made in all other areas.

CBA and Westpac had a relatively consistent approach to attracting new customers across the spectrum.

Meanwhile ANZ showed a clear bias towards higher-net-worth individuals. Its growth was almost solely concentrated in the top 40 per cent of customers in terms of the value of their holdings. The bank also posted the only negative reading across the survey in the lowest-value customers – down 6.9 per cent.

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“The big four banks have been successful at increasing customer numbers, but the issue now is how to grow the customer base in the areas with the greatest profit potential,” said Norman Morris, industry communications director at Roy Morgan Research.

“The strong NAB result in terms of customer growth is likely to be as a result of the ‘break-up’ campaign that started in 2011 with a combination of cutting fees, aggressive home lending and focus on improving customer satisfaction which had been lagging well behind their peers. Since that date, customer satisfaction increased to rival the big four leader, the CBA.”

Mr Morris added that the challenge going forward is cross-selling among high-potential-value customers.

“The top 40 per cent … account for nearly 90 per cent of market value. These higher-value groups generally deal with a larger number of financial institutions and so have a much lower ‘share of wallet’ than the lower-value customers. As such they represent the greatest potential but they need an incentive to consolidate their finances. Banks need to improve on their more typical ‘product silo’ approach to selling if they are to succeed,” he said.

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