Banks challenged in customer relationship performance with Top 500

Australia
ANZ, BNP Paribas, CBA, Citibank, East & Partners, JP Morgan, NAB, St George, Westpac
Customer Satisfaction, Market share, Research

(Australia) – Australia's Top 500 Corporates are demanding greater understanding and loyalty from their banks but the banks are more focussed on products and are struggling to deliver in key relationship areas, according to new research from East and Partners.

The October 2002 results of East's six monthly Australian Corporate Banking Program (Customer Satisfaction) show that the banking industry is performing well in product areas increasingly considered “a given” by customers, but are performing poorly in the relationship areas customers see as increasingly crucial.

459 of Australia's Top 500 Corporates participated in the East and Partners survey, which looked at banks' performance across 26 different product and relationship categories.

This latest survey found:

  • Loyalty to the Relationship was rated number one out of the 26 factors by the customers, but customers rated the banks' performance as only average in this area.

  • Understanding the Customer's Real Business Needs was rated equal second in importance by customers, but was rated 22nd out of the 26 factors for actual delivery.

  • Quality of People was rated equal second by customers, but banks' performance was rated as below average.

  • Understanding the customer's industry sector was rated third by customers, but came in 24th place in terms of actual delivery.

  • Account management was rated as the fourth most important factor for customers, but was ranked in 26th or last place in delivery.

  • Other areas in which banks performed poorly were Proactivity and Innovative Solutions.

The only significant area where there was a correlation between customer expectations and service delivery was in a product – Funds Management – which was ranked fifth in terms of importance, and number one in terms of delivery.

Other product areas where banks are performing well are Forward Rate Agreements, Forward FX, Merger and Acquisition Advice, and Spot FX.

In the M&A markets, however, banks' actual performance rating is higher than its importance to customers, suggesting that banks are over servicing this area of their business – a reflection of just how tough this space currently is.

The survey also looked at the banks' market share in key areas such as primary transaction banking relationships and corporate banking relationships and found:

  • That Westpac's lead as the Current Principal Transaction Banker for Australia's Top 500 is slipping. Westpac has 28.8 percent of principal transaction relationships in this survey, down from 30.8 percent in the last survey conducted in April. Second placed ANZ increased its market share (25.9 percent against 24.2 percent) while the third placed CBA is also gaining (16.8 percent against 16.1 percent). Fourth ranked NAB's market share is also slipping – 14.2 percent in this survey against 15.5 percent in April.

  • Outside the Big Four, St George is the standout performer in transaction banking. St George increased its market share in this area and replaced Citibank in fifth place in this category.

  • Westpac's lead as Current Principal Corporate Banker is falling rapidly and the bank could soon be overtaken by ANZ. Westpac's share of this category fell from 20.6 percent in April to 15.7 percent in this survey. ANZ increased its share from 12.7 percent to 15.0 percent.

  • JPMorgan Chase was rated as the best Relationship Banker. Next was CBA, followed by St George, BNP Paribas and ANZ.

Commenting on the report, East and Partners' Principal Analyst Paul Dowling said: “The goal posts continue get higher for the banks, with the industry performing better in those areas considered less important by customers – a divergence that all players have to address.”

“Notably, debt and some of the financial market product lines are deemed least important by these Top 500 customers, whilst many of the relationship factors are rated as being critically important.”

“There is of course some correlation between these two sets of measures. Service areas in which a bank is seen to be performing poorly often attract high importance ratings for that very reason – they are problem areas for the customer.”

For more information contact sales@eastandpartners.com

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