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Bank customers becoming less likely to recommend their bank

Source: Roy Morgan Single Source (Australia), average monthly sample, n=4,255
Base: Australians 14+ with MFI, average monthly sample, n=3,735. 1. Score of 8,9,10 on a ten point scale where one is very unlikely to recommend to a friend or colleague and ten is very likely. 2. Score of 5, 6, and 7 on a ten point scale. 3. Score of 1,2,3,4 on a ten point scale.
New results from Roy Morgan shows that bank customers are now less likely to recommend their bank than they were prior to the Finance Royal Commission. In February 2018, 59.0% of main financial institution (MFI) bank customers were highly likely (‘high advocates’) to recommend their bank to a friend or colleague but it has fallen to 54.4% in June 2018. This represents a decline of 4.6% points since February and is now at the lowest monthly level since November 2016 when it was 54.1%, although it remains well up on the 45.8% a decade ago in June 2008. Roy Morgan also measures bank customer satisfaction and Net Promoter Score® (NPS), both of which have also shown the same downward trend so far in 2018.

These are the latest findings from Roy Morgan’s ‘Advocacy Report – Financial Institutions  June 2018’ which is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes, including over 4,000 bank customers per month. This large sample of bank customers over many years enables an accurate understanding of long term trends rather than being distracted by what in hindsight can often be seen as relatively short term events.

‘High Advocates’ becoming only ‘Medium Advocates’


The following chart shows that the decline in the level of ‘high advocates’ since February (down by 4.6% points) is mainly as a result of them going back to becoming only ‘medium advocates’ (up by 3.9% points). There was only a marginal increase in the proportion of customers considering that they would be unlikely to recommend their bank (‘low advocates’), going from 8.0% in February up to 8.5% in June. 

The combination of the 34.9% who are only ‘medium advocates’ and the 8.5% who are ‘low advocates’ , means that a very high 43.4% of bank customers are now reasonably indifferent to their bank up from 39.0% in February. This trend poses a potential threat to customer retention and acquisition.

Main Financial Institution (Banks) Advocacy - Monthly


Source: Roy Morgan Single Source (Australia), average monthly sample, n=4,255
Base: Australians 14+ with MFI, average monthly sample, n=3,735. 1. Score of 8,9,10 on a ten point scale where one is very unlikely to recommend to a friend or colleague and ten is very likely. 2. Score of 5, 6, and 7 on a ten point scale. 3. Score of 1,2,3,4 on a ten point scale

ING the clear leader on customer advocacy


In the six months to June 2018, 83.3% of ING customers considering them to be their MFI were very likely to recommend them (‘high advocates’), the highest level of the ten largest banks and an increase of 12.6% points over the last year. In second place was Bendigo Bank with 68.7%, followed by Bank of Queensland (61.2%) and St George (60.5%).

Each of the big four banks were below the six months total banks average of 56.8%, with the best being the CBA on 55.4%, followed by Westpac (53.5%), NAB (52.8%) and ANZ (50.2%).

High Likelihood of Recommending Bank - "High Advocates1" (Main Financial Institution)

Source: Roy Morgan Single Source (Australia), 6 months to June 2017, n = 25,155 and 6 months to June 2018, n = 25,051
Base: Australians 14+. 1. High Advocates scored 8,9,10 on a ten point scale, where one is very unlikely to recommend MFI to a friend or colleague and ten is very likely. 2. Includes banks not shown


Norman Morris, Industry Communications Director, Roy Morgan says: 

“There are many factors that drive the levels of customer advocacy in banks, as shown in detail in the Roy Morgan ‘Drivers of Advocacy-Consumer Banking Market Report’. In summary, these include areas such as, ‘interest rates, fees and charges’, ‘customer experience’, ‘reliability and security ‘ and ‘product offering’. It is not surprising that currently there is the additional impact on satisfaction with banks, NPS and customer advocacy as they face a continuing level of negative publicity from reporting on the Royal Commission.

“Despite the decline in advocacy this year among bank customers, it remains above historic levels but the potential impact of continued negative publicity represents a major challenge for banks.

“The data shown here is only a very small part of the consumer finance data available from Roy Morgan. The full database enables a truly holistic and unique understanding of consumers financial behaviour and trends gathered from 50,000 interviews per annum across more than two decades and includes the complete range of customer metrics including advocacy, satisfaction and NPS.”

Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
For comments or more information please contact:
Suela Qemal, General Manager - Financial Services & Consulting
Office: +61 (3) 9629 6888
Suela.Qemal@roymorgan.com


About Roy Morgan

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

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%

1,000

±3.0

±2.7

±1.9

±1.3

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2