‘Big Four’ market share under threat
(Australia) - Australia's Big Four banks are losing collective market share as principal transaction bankers to Australia's Top 500 corporates, although selectively so, according to new research from market analysis house East and Partners.
East's latest six monthly survey of Customer Satisfaction Benchmarks for transaction banking to the Top 500 finds that the Big Four now account for 86.3 percent of current principle transaction banking relationships, down from 89.4 percent in the last survey conducted in May, although this ground is being lost by just two of the major domestic players.
The survey reinforces findings from other recent East surveys in both the corporate and commercial banking market which services smaller enterprises with between $20-100 million annual turnover.
Those reports also showed that declining customer satisfaction with Westpac and the National Australia Bank (NAB) were translating into a falling market share for both of those banks. On the other side of the equation, improving satisfaction levels with the Commonwealth (CBA) and ANZ banks is resulting in growing market share.
Westpac, although still ranked as the number one transaction banker to the Top 500, continues to lose ground, with its market share down to 29.4 percent against 32.0 percent in May.
NAB is also slipping, with 14.6 percent of the market against 15.7 percent in the last survey.
Ranked third in May, NAB moved down one position to fourth, and was leapfrogged by the CBA, which was the only one of the Big Four to improve its market share. CBA now has 16.9 percent of this market against 15.7 percent in May.
Second placed ANZ has 25.4 percent of primary relationships in this corporate transaction banking market - static relative to its positioning in May of this year.
Although it has the second biggest market share, ANZ was ranked first as the bank perceived as the "Best Stand Out Transaction Bank" across all products and services, with 17.5 percent of the total.
The survey showed that St George continues to "punch above its weight" in the transaction banking market, increasing its market share to 4.2 percent from 3.2 percent in May and delivering high levels of customer satisfaction.
In terms of satisfaction levels, JP Morgan Chase was rated the best service provider, although at a significantly less satisfied level than six months ago.
ANZ replaced Citibank in second place, while HSBC Australia has delivered the fastest increase in service performance in its primary customer base, with a 10.6 percent relative improvement over the past six months.
The survey polled chief financial officers or equivalent office holders at 473 of Australia's Top 500 corporates as part of East's ongoing research into the corporate banking markets.
The survey found that Top 500 customers place little importance on the techniques routinely used by the banks to grow and extend their existing corporate relationships, such as socialising, media advertising and website marketing.
It also showed the banks are putting resources into the wrong areas, with customers wanting better help desk services from their branches.
The five most important issues to corporates in their transaction banking relationships were:
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Quality of Transaction Execution
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Understanding of Customer's Business
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Professional Competence and Response Times on Queries
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Quality of Advice
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Bank's Account Management Practices
The survey also found that banks could "make a difference" and improve their customer satisfaction levels by improving in the following three areas:
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Better Understanding of Client's Needs
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Local Branch Help Desk Support
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Enhance Electronic Deliver Systems
Commenting on the report, East and Partner's principal analyst Paul Dowling noted that while banks were delivering higher levels of customer satisfaction, customer expectations continued to climb by some 4.7 percent over the last two surveys.
"This is making it harder for the banks to kick their goals, and making it increasingly challenging to bring differentiation and value to the customer relationship," said Dowling.
"Not only are the customer expectations becoming more demanding, but banks themselves are making the competitive landscape tougher to perform in through superior service delivery.
"Substantial variations in individual bank performance continue to be evident in the ratings being accorded to each from their customer bases."
"In a marketplace contracting as the number of high end, "available" customers reduces, retention and deepening of a transaction bank's existing base is critical".