Banks using price to leverage share of corporate market
East’s latest six-monthly Corporate Transaction Banking Markets report shows
most commercial banks have recorded significant improvements in both their Value
for Money and Relationship Management performance.
"Big jumps in Value for Money ratings are a clear indication that banks have
repriced arrangements with their customers over the past six months, or have
offered them more service for their money; a tactic normally used to protect
their customer base from competitors," East & Partners principal analyst Paul
Dowling said.
The report shows that customers of Commonwealth Bank of Australia, Westpac and
National Australia Bank have all experienced large improvements in Value for
Money performance from their service providers.
"The only way a bank is going to grow its share of the overbanked and very
visible Top 500 segment is to pinch a customer from a competitor. Given there’s
little to choose between the various banks’ products, some service providers are
choosing to differentiate on price as well as their service propositions," Mr
Dowling said.
"Being competitive on price is of course necessary but it has to be reinforced
by a strong relationship management platform otherwise it’s simply not
sustainable in the long term," he said.
The report finds that St George, CBA and NAB have all improved their
Relationship Management performance while ANZ and Westpac have deteriorated.
CBA tops the Customer Satisfaction – Total Market performance ratings and has
also leapfrogged Westpac and ANZ to become the leading bank in terms of share of
primary transaction banking relationships of Australia’s Top 500 corporate.
"There’s no doubt Commonwealth Bank has got its act together in transaction
banking services over the past couple of years, and customer focus efforts
coming through from the Which New Bank reengineering program have patently
played a large part in the bank’s improvement in this latest report," Mr Dowling
said.
"Once a bank has its service and relationship management platform working well,
it’s pretty simple to start leveraging this with pricing."
"National Australia Bank has clearly started to re-grow its share of primary
customers and has improved its relationship management performance quite
significantly in this report, which would seem to indicate that the bank’s less
centralised strategy is gaining traction," Mr Dowling said.
The report shows that CBA has 22.1 percent of primary transaction banking
relationships compared with 21.4 percent six months earlier.
Westpac has dropped to 21.9 percent from 23.2 percent in the last report; ANZ’s
share has decreased from 22.1 percent six months ago to 21.3 percent this time
around. NAB has grown its share from 16.0 percent to 16.3 percent; and St George
has improved to 5.2 percent in this latest report from 5.0 six months earlier.
For further information, please contact:
Paul Bartholomew
Senior Consultant
East & Partners
Tel: 02-9004 7848
Mob: 0410 400 156
paul.b@eastandpartners.com