(Sydney – 7th April 2003) Australia’s banks may have missed their window of opportunity to provide enhanced e-banking services to customers in the increasingly important commercial or middle-market, according to new research from banking industry analysts East & Partners.
The most
recent round of East’s “Australian Commercial Transaction Banking
Markets” survey has just been released based on interviews with 652
chief financial officers or their equivalents in February.
East’s
Commercial research series looks at the so called “middle-market”
of enterprises turning over between A$20-100 million a year – the engine
room of the economy – of which there are around 6,500.
The survey
found an increasing uptake of Internet Banking and Integrated e-Banking
services from this sector, but identifies growing dissatisfaction with the
way banks are delivering Other e-Services such as e-commerce applications
and developing electronic communities of interest between industry groups.
While this
area has been identified as being of increased importance to this sector,
with 35.0 percent of enterprises engaging these products from their banks
compared with 33.6 percent six months ago, there is also a marked decline in
satisfaction levels.
Of all
transaction banking product areas surveyed, satisfaction levels in this
Other e-Services category were the only ones to register a decline – down by
more than 25 percent.
This is
important to the banks because Other e-Services has also been identified as
one of the main factors driving an unprecedented level of account churn in
this sector, a segment which is increasingly being targeted by banks. It
suggests that a significant window of opportunity exists for non-bank
service providers who can adequately cater to these growing needs.
The East
survey showed that the commercial market is experiencing a rapid escalation
in account churn with 16.0 percent (a huge 32.0 percent annualised level) of
all mid scale customers actively considering a change in their transaction
banker within the coming six months.
Based on the
previous two rounds of this program we are seeing an actual conversion of
this forecast churn level of around 50 percent – meaning that roughly half
of these customers may end up making a move of banker, in whole or part,
within six months.
This latest
round of research has also found:
-
That
the trend for NAB and Westpac to lose market share as Current Principal
Transaction Banker to CBA and ANZ is continuing. NAB is still the market
leader, but its share fell from 23.9 percent six months ago to 23.2
percent. CBA is ranked second and continues to gain ground, moving from
22.3 percent to 22.7 percent. ANZ’s share climbed from 19.6 percent to
19.9 percent, while Westpac’s slipped from 17.6 percent to 17.2 percent. -
Fifth
ranked St. George continues to pick up market share, up from 4.9 percent
to 5.2 percent. Regional players such as Suncorp, the Bank of Queensland
and Bendigo are also starting to make inroads as Secondary Transaction
Bankers. -
Product
uplift from these middle market corporates is increasing, with customers
showing a higher engagement of transaction banking product types such as
cash management, integrated e-banking, internet banking, receivables,
payables, trade finance and other e-services.
This sector
is becoming less sensitive to fee levels. Six months ago, 11.6 percent of
respondents nominated a reduction in fees as the single most important
change they wanted in their banking relationships, but this fell to 8.7
percent in the current survey.
Commenting on
the report, East & Partners principal analyst Paul Dowling said:
“This latest survey brings together several themes we have already
identified – this commercial sector is becoming increasingly sophisticated
in its product usage and increasingly discerning on what they want from
their banks.”
“Average
account life is shortening and the market is showing an unprecedented level
of churn. This is based not just on hot competition between banks for new
customers but is driven by increasing expectations which, in turn, is being
evidenced by rapidly dropping customer dissatisfaction.”
“The
fact that banks are also failing to deliver extended e-commerce applications
to their customers is highly significant, and suggests that for all their
efforts in the technology area, banks are struggling to understand the key
business needs of their middle market business customers.”
For more
information, contact:
Lachlan
Colquhoun
Executive Editor
East & Partners
Tel: 61-2-9004 7855
Fax: 61-2-9004 7070
Mobile: 61-405 322 399
lachlan.c@eastandpartners.com
www.eastandpartners.com