What The Lack of Trust In The Big 4 Means For The FutureMay 14 2020
Written by Ben Crow, COO at WLTH Finance Tracker
The latest Australian Banking Brand and Trust Report has been released by Glow this week and it has highlighted how the Australian public is feeling about big banks. After the Royal Commission and the allegations against Westpac for breaches of money-laundering and counter-terrorism finance laws, there has been a monumental shift in consumer behaviour.
One of the key reasons the big banks have always maintained dominance is due to the trust they have installed in consumers, however since the royal commission, over 33% of Australians have reported a loss of trust in their bank and the latest Glow report drives home these numbers with the big four all appearing in the lowest 10 places.
The level of trust has not only affected the institutions, but the industry as a whole with the report also finding that out of 17 industries, banking was in the bottom 3 places, ranked 14th most trusted.
With the trust gone, it leaves the door open for a shift towards the new neo/challenger banks. They now have an opportunity to start acquiring customers in some of the niche areas of banking allowing them to showcase some of the benefits of moving away from the larger institutions.
Although some might look at this as only a small piece of the pie, it enables these challengers to continue building trust with the consumers. They have an opportunity to be able to look after their new clients and demonstrate their level of service. If these new institutions are able to provide an easy transition away from the big four and build trust with these early movers, it will open the door for them to take a bigger chunk of the pie in the future.
The latest findings also demonstrate that the challengers are already starting to notice increased trust on the index with 86400 moving up 8 places and Xinja moving up 4 places in the last quarter.
With the open banking regulation set to come into effect on 1 July 2020, this will also play strongly into the hands of these new banks.
Why? Because open banking will make it much easier for customers to switch providers. It will allow them to take advantage of new offerings and products that can better serve them, to not only save money but cater to their needs with a more personalised strategy.
These low levels of trust, the implementation of open banking and the growth of digital solutions implemented through the Covid-19 pandemic have presented a huge opportunity for these new banks to strike while the iron is hot and start making a significant dent in the market share of the big banks.
Australian consumers, now, more than ever are demanding high levels of service, personalisation and seamless technology solutions. For institutions to transition will take time, and time is something they don’t have on their side. But for digital-first, progressive businesses, they can deliver what the Australian consumer demands, creating a very interesting future of banking over the next few years.
For access to the full Glow Report visit: https://www.glowfeed.com/indices/