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As investors are focused more on their banks, banks themselves are demonstrating a renewed focus on improving their services to their customers. Over the 12 months to July 2007, customers of New Zealand’s major banks have registered greater levels of satisfaction and the more business they have with their banks, the more satisfied they tend to be.

Roy Morgan New Zealand found that in the 12 months to July 2007, satisfaction reported by customers of the five major banks improved 3.8 percentage points to 75.6%. 

The biggest improver was Westpac, with those who have any relationship with Westpac increasing their satisfaction level by 6.1 percentage points to 71.1%.  While this represents a steady and significant improvement over the past 12 months, Westpac still trails its competitors.

National Bank continues its leading position among the major banks with a satisfaction level of 79.3%, an improvement from a year ago of 4.3 percentage points. Following closely was ASB at 78.5%, an increase of 2.2 percentage points. BNZ improved by 3.3 percentage points to 75.2% with ANZ following with 73.7% which was a gain of 3.8 percentage points over the past 12 months.

Demonstrating that there is still room for improvement, the two leading minor banks TSB and Kiwibank still outperform their larger competitors with satisfaction levels of 93.2% and 80.0% respectively.  Kiwibank has however shown the only decline among all reported banks over the last 12 months, down 2.4 percentage points while TSB increased its market lead with an increase of 0.9 percentage points.

In comparison to the performance of the four major banks in Australia, customer satisfaction amongst New Zealand’s five major banks is higher overall and improving at a faster rate.  Total satisfaction for the five major banks in NZ is 80.7%, whereas the major banks in Australia have a customer satisfaction score of 71.5% up 1.7% form the 12 months to July 2007.

Chart 1: Customer Satisfaction in New Zealand

“% Satisfied” is the proportion of all customers who are “Very” or “Fairly” satisfied with their overall relationship with the financial institution (from a five point scale).

Table 1: New Zealand Customer Satisfaction, July 2007

Percentage of each institution's customers (14+) who are satisfied			Percentage Point Change
Banks	Jul-07 (%)	Jul-06 (%)	Jul '06 - Jul '07 (%)
ANZ (exc. NBNZ)	73.7	69.9	+3.8
ASB	78.5	77.5	+1.0
BNZ	75.2	71.9	+3.3
NBNZ (exc. ANZ)	79.3	75.0	+4.3
Westpac	71.1	65.0	+6.1
Kiwibank	80.0	82.4	-2.4
TSB	93.2	92.3	+0.9
Total Big 5	75.6	71.8	+3.8
All Customers	75.9	73.3	+2.6

(Period: 6 months data, ending July 2006 and July 2007; Base: Population aged 14+ who have any relationship).

“% Satisfied” is the proportion of all those who are “Very” or “Fairly” satisfied with their overall relationship with the financial institution (from a five point scale).

Leslie Morton, Finance Industry Director at Roy Morgan New Zealand, says:

“Overall, the major banks in New Zealand are satisfying their customers more today than they did a year ago.  They are however still trailing their main smaller competitors.”

“Overall, New Zealand’s five major banks scored 75.6% in comparison with Australia’s major four banks at 70.3%.”

 “Westpac has shown some encouraging improvements and has improved more than any other bank, but they still lag behind their competitors. Westpac had dropped the ball on consumer banking especially in the important mortgage market and had lost market share. In the second half of 2006 a greater focus had been given to consumer banking and this has been reinforced with the arrival of a new CEO, Brad Cooper earlier this year. More competitive product offerings have started to bear fruit. One disappointment for Westpac however is that much of this improvement has been with their smaller and least profitable customers. The more profitable customers have yet to be turned.”

 “TSB and Kiwibank are still performing better than their larger Australian based competitors.  Both have committed to a strong local brand with high ‘staff service’ component. Importantly they have been seen to perform to their promise.”

Customer Satisfaction among the most profitable customers

The top one fifth of bank customers by deposit, cards and loan balances, provides over 70% of profitability for banks.  It is in this group that higher customer satisfaction represents a higher brand value for banks. When we look at this top 20% group or “top quintile”, we find that the relative order of performance by banks in customer satisfaction is somewhat different. 

National, ASB and BNZ retain their relative order with 81.0%, 78.2% and 74.3% satisfaction levels respectively. 

At the tail of the field however, Westpac reverses their overall performance by leading ANZ with 72.7% compared with 69.7% respectively.

Table 2: New Zealand Top Quintile Satisfaction, July 2007

Percentage of each institution's Top Quintile, customers (14+) who are satisfied			Percentage Point Change
Banks	Jul-07 (%)	Jul-06 (%)	Jul '06 - Jul '07 (%)
ANZ (exc. NBNZ)	69.7	68.1	+1.6
ASB	78.2	80.2	-2.0
BNZ	74.3	67.7	+6.6
NBNZ (exc. ANZ)	81.0	77.0	+4.0
Westpac	72.7	69.0	+3.7
Total Big 5	75.7	73.0	+2.7
All Customers	75.1	72.5	+2.6

(Period: 12 months data, ending July 2006 and July 2007; Base: Population aged 14+ who have any relationship).

“% Satisfied” is the proportion of Roy Morgan Top Quintile, all those who are “Very” or “Fairly” satisfied with their overall relationship with the financial institution (from a five point scale). Roy Morgan Quintile (traditional banking) is a segmentation based on dollar value a respondent holds in total at all institutions in Accounts, Cards or Loans, whereby the “Top Quintile” contains approximately 20% of the population with the largest dollar value.

Leslie Morton, Finance Industry Director at Roy Morgan New Zealand, says:

“In the critical ‘most profitable’ customer segment, National Bank took a lead from its competitors with a significant 6.6 percentage points improvement in customer satisfaction over the past 12 months. If we look at the top fifth of consumers by the size of their overall banking, National Bank has managed to satisfy 81.0% of this segment ahead of ASB and BNZ with Westpac edging out ANZ which trails its competitors. Only ASB performed at a lower customer satisfaction rate for this segment now than they did 12 months ago.

“Interestingly, our major banks tend to rate a higher satisfaction level among their most profitable customers than nearly all other ‘profit segments’. This is the reverse for these very same banks in the Australian market where generally the more profitable the customer, the less satisfied they tend to be.  They may be able to take a lesson from their New Zealand counterparts.”

 

About Roy Morgan International:

Roy Morgan International’s Single Source data provides the most comprehensive and in-depth analysis possible for bank satisfaction data. The data is collected in more than 55,000 face to face interviews each year in Australia and includes all financial institutions where respondents hold their deposit accounts, not only data on their main financial institutions. The same data is also collected in 12,000 interviews each year in New Zealand, providing a unique capability to directly compare the satisfaction performance of banks in both Australian and New Zealand markets.

Roy Morgan International is the largest independent Australian research company, with offices in each state of Australia, as well as in New Zealand, the United States, the United Kingdom and Indonesia. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan International has more than 60 years’ experiences 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 International is a specialist in recontact customised surveys which provide invaluable and effective qualitative and quantitative information regarding customers and target markets.

For comments or further detail, please contact:

Leslie Morton - NZ Finance Industry Director

Email: Leslie.Morton@roymorgan.com          Ph: +64 (09) 9127 032               Mobile: 021 1897744

Norman Morris - Global Finance Industry Director

Email: Norman.Morris@RoyMorgan.com      Ph: +61 (03) 9224 5172            Mobile: 0402 014474

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