Smaller lenders outdo big four

A new report reveals Westpac is still the most popular major bank among business customers, but remains well behind smaller lenders including Bendigo and Adelaide Bank, and Macquarie Bank.

DBM’s latest Business Financial Services Monitor, which measures customer satisfaction among the banks, shows Westpac has maintained its lead as the favoured bank among the micro, small and medium markets.

Within the micro market segment – which refers to businesses with annual turnover of less than $1 million, and represents 89% of survey respondents – Westpac scored 7.2 out of 10.

This was followed by ANZ, with a score of seven out of 10, the Commonwealth Bank at 6.9 and NAB at 6.8.

DBM managing director Dhruba Gupta says Westpac has been “moving ahead” because it is seen to deliver on its promises, and improvements in the bank are more obvious to customers.

He says ANZ’s stable ratings have been evident in the micro segment for the past four months, while NAB has turned around its ratings in the micro segment after four consecutive monthly declines.

“Although NAB was steady in all other segments, and even declined slightly in the large business segment, it improved its overall satisfaction rating, driven by the micro segment, which accounts for most Australian businesses,” Gupta says.

Meanwhile, CBA’s ratings in February were the same as in January, with the lender continuing to dominate the large business segment.

Gupta says even though the major banks recorded “moderately good scores”, they were still unable to outdo their smaller competitors.

According to Gupta, lenders such as Bendigo and Adelaide Bank, Rabobank and Macquarie Bank all outperformed the big lenders, receiving scores of eight and above.

Gupta says the gap is growing, with regard to customer satisfaction levels among small banks and big banks, partly because the former are seen to be more accessible.

“This suggests that a locally-focused brand – providing it can offer all the same things as a big bank – has an increasingly large role to play [in the lending market],” he says.

With the big four holding more than 80% market share, in addition to offering similar products at similar prices, Gupta says small things can make a huge difference to customers’ satisfaction.

These things included returning customers’ phone calls, matching bankers with the right clients, and giving employees the authority to act.

Gupta also points out that NAB’s score lifted in February for the first time since October 2010, putting it in closer proximity to ANZ and CBA.

“It will be interesting to see how their ‘breaking up’ campaign affects these results over the next few months… From a business perspective, there will have to be some tangible benefits [for customers to switch banks],” Gupta says.

Speaking at a function recently, NAB chief executive Cameron Clyne said the campaign has already led to a 35% increase in mortgage enquiries, and a 45% in mortgage re-finance applications from the customers of other banks wanting to switch to NAB.