Bank loyalty disappearing as deposit market heats up

Wednesday 23rd September 2009

Bank customers are opening accounts with rival institutions at a rate that has surprised RaboPlus, one of the most aggressive competitors in New Zealand's competitive retail bank deposit market.

Releasing the first in a new six-monthly RaboPlus Financial Confidence Index, chief executive Mike Heath said more people were opening new accounts while keeping old accounts open.

"They're keeping their old banks, but starting new relationships," he said of findings that 14% of those surveyed had opened an account with a new bank in the last six months, with the greatest movement among under-35 year-olds. RaboPlus has heavily promoted its deposit offerings as an opportunity to have "a significant other" bank relationship.

The poll by global market research firm TNS Conversa surveyed a representative sample of 1000 New Zealanders registered in the 140,000-member SmileCity online rewards scheme.

Among key findings:

confidence in finance companies was a net 30% negative among non-customers, but just net negative 6% among existing customers, possibly indicating that those still exposed to finance companies have funds with the few survivors of the recent shakeout. Finance companies were the least likely to be recommended to families and friends, compared with other deposit-takers, insurers, and investment managers and advisors;
confidence in credit unions and building societies was equal to faith in banks among members of such organisations at a net 40% positive;
banks attracted net 39% positive support from customers, and there are virtually no people who are not bank customers;
customers rated their financial advisers higher, at a net 35% positive, than customers of funds managers and share brokers, who rated them a net positive 22%, a result described as "interesting" given the poor view of finance companies;
non-customers of investment managers and advisers took the dimmest view of sharebrokers, with a net 3% expressing a negative view of the profession;
the most commonly cited source of investment advice among people who rated themselves financially "competent" was accountants and lawyers, at 29%, compared with 15% citing an insurance broker, 14% a financial adviser, and 9% a sharebroker.

The survey also asked about financial circumstances, with results mirroring other research suggesting New Zealanders believe the economy is turning up, with Christchurch the most optimistic city, and a clear split between urban optimism and rural caution.

Investment intentions remain conservative, with 51% of those surveyed saying they would either definitely or probably make a bank deposit in the next six months, 26% saying this of managed funds or Kiwisaver investmnets, 9% citing shares and bonds respectively, and just 4% intending to deposit with a finance company against 71% saying "definitely not" or "probably not".

Businesswire.co.nz

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