Royal commission sends bank customers packing

Banking Day staff Financial institutions / Big five & fintech
Industry yawns at Hayne and the rebel yell    (AAPIMAGE)
Industry yawns at Hayne and the rebel yell (AAPIMAGE)

Trust in Australia’s financial services industry and its leading institutions has dropped following the Hayne Royal Commission. That's according to the results of a survey of 1000 consumers by financial services "customer experience" agency Yell and market research firm Ipsos.

Yell concluded that the major banks' position has slipped from second most trusted in 2017 to fifth in 2019.

Survey respondents were also asked whether they had changed financial services providers as a direct result of the royal commission, with 4.9 per cent of respondents confirmed they already changed their bank as a result of the royal commission and a further 7.9 per cent said they were considering making a change.

Nevertheless, respondents were clear that not all banks were equally untrustworthy.

"While banks of all types may be seen as trusted to keep Australians’ money safe, it’s the smaller banks that are trusted to put their customers’ interests before their own. These smaller banks are doing a better job of connecting emotionally with customers and are growing as a result,” Nigel Roberts, founding partner at Yell said.

The survey results, however, did not back marketers' expectations as consistently in all aspects of the financial services sector: while a clear majority (64 per cent) of consumers who were polled by Ipsos said they were convinced that the Big Four put profits before people, they stayed with them nevertheless: "82 per cent market share says a lot", Roberts observed.

"The simplest [explanation] is that, on a day-to-day basis, the big banks meet customers’ expectations.... they deliver on functionality and basic services," Roberts said.

Superannuation providers remain the most trusted industry sector despite the royal commission recommending that some funds be referred to regulators to establish whether criminal or civil proceedings should be instigated.  The churn rates are in line with those of bank customers: 4.2 per cent of respondents stated that they had changed their super fund provider as a direct result of the Royal Commission, with a further 5.6 per cent ‘considering it’.

“This year’s results show the very real effects the royal commission has had on the Australian banking and wider financial services landscape," Roberts said.

"As more neobanks launch in Australia, with value propositions purportedly different to the Big Four, it’s possible that we will see further erosion of their dominance and a more fragmented market. More choice should mean better outcomes for customers," Roberts said.