July 20, 2018

Overseas born Australian residents turning away from Big 4 banks

New results from DBM Consultants show that market share and customer loyalty for the Big 4 banks is highest amongst new residents settling in Australia. In the 12 months to May 2018, 83% of new arrivals in the last 2 years nominated one of the Big 4 as their main financial institution. This compares to 65% for all Australians aged 14+ years old.

While the security of the Big 4 is an initial attraction, before long many overseas born residents move or spread their banking elsewhere. As time passes, the Big 4 bank’s share declines to 73% after 10 years of residency and 63% after 20 years, with notable shifts to credit unions and mutual banks.
These are the latest findings from DBM Consultants Consumer Atlas, a survey of over 60,000 consumers per annum.

In line with a progressive shift away from the Big 4, overseas born customers become less likely to recommend the Big 4. Residents living in Australia for 2 years or less give a high Net Promoter Score (NPS*) of +26.2 for the Big 4 combined. As length of residency increases, loyalty towards the Big 4 declines with 10+ years residents giving a significantly lower NPS of just +1.4 for the Big 4 combined. The factors weakening overseas born customers’ advocacy of the Big 4 are: lack of recognition of their loyalty and business, less competitive deposit and loan interest rates, and fees and charges.

DBM’s Managing Director, Dhruba Gupta, said “these results highlight that the Big 4 are letting the customer lifetime value of new Australian migrants slip through their fingers. Every year close to 250,000 people select Australia as their new home, accounting for 63% of Australia’s total population growth. Migration will continue to outpace the natural increase in Australia’s population and the Big 4 need to capitalise on the early “good will” shown by new residents and fully ensure it is maintained to retain these often very valuable customers.”

Net Promoter Score (NPS) is a service mark of Bain and Company, Inc., Satmetrix Systems, Inc., and Mr Frederick Reichheld. Advocacy is measured on a scale of 0 to 10, with 0 being 'very unlikely' to recommend and 10 being 'very likely' to recommend. NPS is calculated by subtracting the percentage of 'Detractors' (score 0-6) from the percentage of Promoters' (score 9-10).

For comments or more information please contact:
Simon Pomfret Group Account Director

About DBM
DBM Consultants is an Australian market research company established in 1992. It is a leading provider of research based advice and engaged by many of Australia’s largest blue chip corporations, some government departments and several global organisations.

About Consumer Atlas
Consumer Atlas is Australia’s largest on-going research program on how the nation does its banking and what customers think about the providers of financial services and the products they offer. It is based on a nationwide representative sample of about 60,000 Australians.

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