A greater proportion of customers with locally-owned banks believe they’re being paid “competitive” interest on their deposits than do customers of their Australian-owned rivals.
People who bank with TSB, Kiwibank or the Co-operative Bank are also far less likely to say they’re considering switching bank.
These are the findings of a Consumer NZ survey of bank satisfaction which has led the consumer watchdog to give the three banks a joint “People’s Choice” award.
“It’s unusual to have three winners in one category,” said Consumer NZ’s general manager Derek Bonnar. “However, all three deserve the recognition and we congratulate them on an outstanding achievement.”
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TSB Bank topped the “nationally representative” survey of 1085 people with an overall customer satisfaction of 87 per cent, followed by first-time winners The Co-operative Bank at 77 per cent and Kiwibank at 71 per cent.
The big four Australian-owned banks earned far lower scores: BNZ 62 per cent, ASB 58 per cent, and ANZ and Westpac 52 per cent.
It was the first time Co-operative Bank had elicited enough survey responses to be included in the results, Bonnar said.
High customer satisfaction was related to a number of factors, including highly visible fees like monthly account fees.
But there also appeared to be an “endowment” effect, in which people who wanted to bank with a locally-owned bank derived additional satisfaction from doing so.
“Two-thirds of TSB Bank and Kiwibank customers rated doing business with a New Zealand-owned company as a key benefit,” Bonnar said.
“Local bank customers were also less likely to be paying monthly account fees. As a result, they were more likely to feel the bank’s fees were reasonable.”
The locally-owned banks were much more likely to be seen by their customers as paying competitive interest rates on deposits, though they did have lower credit ratings than their much-larger rivals.
The Co-operative Bank, for example, was paying 3.6 per cent on a $10,000 one-year term deposit on Monday, compared to the 3.35 per cent paid by Westpac.
The Co-operative Bank, which is owned by its members, was rated BBB. Westpac, which is owned by shareholders, was rated AA-.
Both ratings were considered “investment grade” by professional investors, but while companies rated AA were judged by ratings agencies like Standard & Poor’s and Moody’s as having a “very strong capacity to meet financial commitments”, organisations rated BBB had “adequate capacity to meet financial commitments”, but were “more subject to adverse economic conditions”.
Bonnar said there were a large number of dissatisfied bank customers.
“Across the whole survey nine per cent said they were very likely to switch bank in the next 12 months. Another 9 per cent were somewhat likely,” he said.
People who said they were likely to shift banks were far more likely to be banking with an Australian bank, Bonnar said.
About one in eight people reported a problem with their bank in the last year, and “incorrect” charging for banking appeared to be a big problem.
Almost a third (31 per cent) of people who had had problems with their bank said they had been overcharged.
Despite the high customer satisfaction scores, the locally-owned banks appeared to be responsible for more than their share of complaints to the Banking Ombudsman.
“Unresolved problems with a bank may eventually end up at the Banking Ombudsman. Last year, the office dealt with 2704 cases. The big four Aussie banks generated about 77 per cent of these, although this was proportionally lower than their combined market share of 88 per cent,” Bonnar said.