Australian banks struggling to keep up with demand for digital
BANKING in Australia is typically quite transactional, and residents usually only deal with the four biggest organizations in the country — the National Bank of Australia, Commonwealth Bank, ANZ Banking Corporation, and Westpac.
However, as demand for digital products, solutions, services, and offerings rise, customers are increasingly moving away from these four to new-age banking services providers.
According to Nielsen, as many as 2.1 million Australians aged 18+ are looking to change their main financial institution within the next six months.
Of them, 67 percent are customers of the big four while 16 percent are looking to change to digital banks such as ING, ME Bank, and UBank.
Further, Nielsen’s survey shows that 90 percent of Australians who are customers of digital banks are very or quite satisfied — with 22 percent more likely to be satisfied when compared to those of the big four bank customers.
Also, 75 percent of Australian customers of digital banks, such as ING, ME Bank or UBank, said they would recommend their bank, compared with only 45 percent of the big four banks customers that would recommend their bank.
“Australians will soon have the ability to own their financial data, and have personal financial information easily accessible and transferable to other financial institutions, with open banking coming into effect on 1 July 2019,” pointed out Nielsen analysts in a recent blogpost.
“This may lead to more consumers switching banking providers and will allow for more competition and choice in the marketplace, and more control for the consumer.”
From traditional to digital to neobanks
According to Nielsen, customers aren’t just transitioning away from traditional banks to digital banks.
Many are actually simply switching to neobanks — organizations that are 100 percent digital and on-mobile, with no physical location whatsoever — often without even a desktop website.
Digital banks (especially in Australia), although comparable, are often owned by or affiliated with traditional banks, which was expected to give customers a sense of security and comfort, but it seems as though neobanks are winning hearts and growing accounts without too much trouble.
“Alongside advancements in technology, open banking has encouraged the progressive rise of neobanks in Australia, such as Xinja, 86 400 and Volt.”
“The trend toward digital banks is paving the way for neobanks to gain market share. While early adopters of neobanks have traditionally been millennials aged 18 to 35 (as seen across Europe), their customer base has rapidly expanded across 18 to 80 year olds for some brands in Australia.”
One of the biggest reasons for the success of neobanks seems to be their ability to not only put financial ownership in the hands of customers but also ensure that customers get the best deals banking, credit cards, and mortgage products.
Further, given the smart, digital nature of neobanks, they’re typically focused on providing a better, more personal experience to customers via “mobile” — their only touchpoint in many cases — which is something customers really appreciate.
Finally, in many cases, as a result of algorithms and advanced technologies at play, neobanks are able to shorten the application and evaluation process for financial products such as loans and mortgages, significantly improving the customer experience.
“While the big four banks have acknowledged faults and are seeking ways to improve future engagements, neobanks are at the forefront and growing their customer base daily.”
At the end of the day, what customers really care about is getting products that suit them, at rates that are fair and competitive, in a way that’s convenient.
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