What do we want? Lower fees and better access to ATM networks. When do we want them? Now!
These two features are the key reasons why consumers switch their daily transactional bank accounts, according to a new report* released this week by Datamonitor – and unsurprisingly, Gen Ys have been revealed as the most likely to move banks.
Gen Y, defined in the report as those aged 18-30, are the least loyal of all account holders, as they’re up to five times more likely to switch their transaction account than the older generations.
“The key challenge for financial institutions targeting deposit consumers, especially younger generations, is to overcome their low level of loyalty,” says Harry Senlitonga, Datamonitor’s senior analyst and author of the report.
If banks want to hold on to their Gen Y consumer base, he adds, they’re going to need to “offer incentive schemes to increase levels of customer loyalty”.
In a month where banks are announcing record profits – CBA posted annual net profit of close to $6bn, while NAB posted third-quarter cash earnings of $1.1bn – it may seem that holding on to customers is the least of the banks’ concerns at present.
But Rod Mason, Financial Services Union (FSU) policy director, believes it’s time for banks to give back to the community after being helped by taxpayers during the economic downturn.
“Banks are reaping the profits after being assisted through the global financial crisis by the taxpayer,” he says.
“It begs the question, what will they give back?”
Clearly, ongoing fees and charges are important to everyday account holders, which NAB recognised and began to address last year.
In the second half of 2009 NAB announced that it would reduce or abolish a range of service and penalty fees on personal accounts. They got rid of their $4 and $5 monthly account keeping fees, abolished their $30 overdrawn fee and reduced all credit card over-limit and late payment fees from $30 to $5.
The strategy worked, with Senlitonga pointing to NAB’s leadership on bank fees as being the key driver for attracting new consumers.
“Fifty-eight per cent of consumers indicated better fees as one of their reasons to switch their transaction account to NAB,” he confirms.
Other banks have slowly begun to follow suit – but if you’re not convinced you’re getting the best deal, finance commentator Michael Pascoe urges you to shop around.
“The banks really want your money now,” he says.
“The good news is, there’s never been a better time for retail customers to put the squeeze on their bank. While they may have treated you like inconvenient dirt in the past, retail customers are suddenly prized possessions.”
* Australian Consumer Deposits 2010