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Big Four Banks making some progress with cross sell but big potential remains

Source: Roy Morgan Consumer Single Source, 6 months to May 2010 n= 24,558 and 6 months to 2014 n= 22,908
Base: Banking and Finance customers 18+
Australian banks pay close attention to the average number of products their customers hold with them but the real test of cross sell success or customer loyalty should be based on what proportion of their customers’ products they hold. Currently the Big Four Banks on average hold only just under one third (32.0%) of their customers financial products, an increase from 28.8% in 2010. Potential products include Accounts, Cards, Loans, Insurance, Superannuation and Managed Funds. These figures are based upon the latest findings from the Roy Morgan Consumer Single Source Survey of approximately 50,000 people p.a.

Major Banks’ Cross Sell Performance

The average proportion of products, held by customers of each of the major banks, varies considerably, the highest currently is the CBA Group with 37.5%, followed by Westpac Group (32.5%), ANZ Group (29.9%) and NAB Group (28.0%).

Share of Big Four Customers’ Banking and Finance Products* Held at Bank 

banking-products-share

* Products include Accounts, Cards, Loans, Insurance, Superannuation and Managed Funds. Source: Roy Morgan Consumer Single Source, 6 months to May 2010 n= 24,558 and 6 months to 2014 n= 22,908. Base: Banking and Finance customers 18+

Since 2010 all of the major banking groups have made some gains in the proportion of their customers products held but the product area where gains have been made varies by bank. The ANZ Group has had its biggest gains in the proportion of its customers Mortgages held; the CBA Group has gained Mortgages, Credit Cards and Accounts, the NAB Group has improved in Accounts, Credit Cards and Mortgages and Westpac Group has gained in Insurance, Accounts and Superannuation.

Major Banks’ Competitors

Each of the Big Four banks faces considerable leakage of their customers’ business to other Big Four banks. For the ANZ and NAB, 19% of their customers products are held by other Big Four banks, compared to 15% in case of the Westpac Group and 12% for the CBA Group.

In spite of the vigorous competition waged between the major banks, numerically, the biggest competitors in terms of products for each of the major banks are other financial institutions and major insurance companies. Industry Superannuation Funds are also a major competitor across all of the Big Four Banks with around 4%-5% of products but greater share in terms of value. Credit Unions and Building Societies now only hold around 2% of the Big Four Banks customers’ products.

Share of Customers banking and Finance Products

finance-products

Source: Roy Morgan Consumer Single Source, 6 months to May 2014 n= 22,908. Base: Banking and Finance customers 18+

Norman Morris, Industry Communications Director Roy Morgan Research says:

“While the Big Four Banks have made some small gains in product cross sell since 2010, overall they have not performed well. Reasons for this include lack of incentive for customers to consolidate, competition from specialists providers such as for superannuation and insurance, lack of product awareness, some concern regarding the spread of risk and staff that may not feel confident in a selling role.

“It is clear from the analysis that there is plenty of scope for these banks to increase their business from their existing customers rather than chasing new ones.”

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For comments or more information please contact:

Norman Morris Industry Communications Director
Telephone: +61 (3) 9224 5172
Mobile: +61 402 014 474
norman.morris@roymorgan.com

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About Roy Morgan Consumer Single Source

Roy Morgan Single Source is based on over 50,000 interviews each year and has been designed and engineered to represent the ideal source model. It provides an integrated understanding of consumers; what they are like, what they consume, what they buy, what they think, what they want, what they watch, read and listen to. The overriding benefit of Roy Morgan Single Source is the strategic insights it offers in the ability to link many aspects. Not only can an organisation’s profitable customers be delineated by what they think, do, watch, but so can non customers. Hence brand positioning, product differentiation, merchandising, efficient media planning, market expansion and line extension opportunities can all be considered in the light of the correct understanding of the marketplace.

About Roy Morgan Research

Roy Morgan Research is the largest independent Australian research company, with offices in each state of Australia, as well as in New Zealand, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan Research has over 70 years’ experience in collecting objective, independent information on consumers.

In Australia, Roy Morgan Research is considered to be the authoritative source of information on financial behaviour, readership, voting intentions and consumer confidence. Roy Morgan Research is a specialist in recontact customised surveys which provide invaluable and effective qualitative and quantitative information regarding customers and target markets.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

5,000

±1.4

±1.2

±0.8

±0.6

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2