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Lack of customer loyalty among financial institutions’ deposit customers

*Base: Australians 14+ with an account, loan or card with institution.
Source: Roy Morgan Single Source (Australia), 12 months to February 2013, sample size = 50,800.

The customers of the major financial institutions show very little loyalty when it comes to where they hold their deposits, with only just over half (average 53%) of their deposit dollars being held with any one institution. Despite “share of wallet” being a key metric in bank marketing it has in fact declined marginally (from 55%) over the last four years. These are the latest findings from the Roy Morgan Research Consumer Finance Survey of over 50,000 interviews p.a.

Over the 12 months to Feb 2013, the CBA has had the highest share of their customers’ deposit wallet with 60%. This means that 60% of the deposits held by CBA customers (defined as those having a banking relationship i.e. cards, loans or accounts) are held with the CBA, with the other 40% being held at other financial institutions. The CBA is well ahead of it’s nearest big four competitor the NAB with 55%, followed by the ANZ (52%), and Westpac (48%). The lowest figure was for ING with 40% deposit wallet share.

Share of Customer Deposit Dollars Held

*Base: Australians 14+ with an account, loan or card with institution.
Source: Roy Morgan Single Source (Australia), 12 months to February 2013, sample size = 50,800.

Norman Morris, Industry Communications Director Roy Morgan Research says:

“The scope for financial institutions to increase deposits from existing customers is close to 100% but very little progress has been made to date for a number of reasons. Generally there is insufficient incentive or benefit for customers to consolidate and so they just select the best or most convenient account at the time of making a decision. In the case of the higher balance customers, the concept of risk or putting “all their eggs in one basket” is also likely to play a part, particularly following the GFC.

"A major reason for the strong performance of the CBA is most likely due to the fact of the Commonwealth Bank’s history of being a government owned bank, some customers perceive it as being more secure, likewise St George, as the largest regional bank in Australia, has a heritage that leads to it capturing a large proportion of its customer’s deposits. These results may support Westpac’s multi-brand strategy with a stronger performance by its subsidiary brands St. George (55%) and BankSA (60%) than for the main brand Westpac (48%).

"It’s likely that ING Direct with its internet only business model is not viewed as being able to cater to the breadth of its customer’s deposit needs. Other institutions that do not capture large proportions of their customer’s deposit dollars are Rabobank (45%) and Macquarie Bank (37%).”

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For comments or further detail, please contact:

Norman Morris, Industry Communications Director

Telephone:          +61 (3) 9224 5172

Mobile:                  +61 402 014 474

Email: norman.morris@roymorgan.com