According to recent research, banks’ over-reliance on cross-selling products may have been overstated.
Banks and financial groups came under intense scrutiny during the banking Royal Commission for aggressively cross-selling products to existing customers.
They were accused of pushing products like superannuation or life insurance to mortgage holders or financial advice customers.
The commission heard examples of vulnerable people being convinced by staff to take up other products on their suite.
But research from Roy Morgan shows over the last four years bank have been losing their share of customer ‘wallet’, which refers to the total value of products held by one customer.
‘Share of wallet’ can help assess how successfully a company or group is referring existing customers to other product lines within the group.
Roy Morgan’s Banking and Finance Industry Currency Report showed that over the past four years NAB fell 3.7 percentage points to 29.5%.
CBA lost 2.6 percentage points to 31% share of wallet, ANZ Group’s share fell 1.1 percentage points to 27.7% and Westpac was down 0.9 percentage points to 28.3%.
Roy Morgan said that while the Royal Commission had exposed serious problems in selling practices, these share of wallet trends demonstrated the increased product competition.
Norman Morris, Roy Morgan industry communication director, said, “Nobody would seek to excuse the behaviour exposed by the Royal Commission, but what our latest data reveals is that consumers are looking around for new products and new providers of those products.
“Competition is clearly increasing in the financial services sector, not least because of the rise of highly innovative fintech offerings.
“Increased competition should be welcomed because ultimately it is the best way to improve customer service and drive product innovation.”
The big four banks still maintained a larger share of their customers’ total number of financial products.
CBA Group on average provides 3 out of 8.2 products held by each customer (37%); ANZ provides 2.8 out of 9.6 products (29%); NAB provides 2.7 out of 9.8 (28%) and Westpac provides 3 out of 9.6 (31%).
Compared to smaller banks, ING provides an average 2.2 out of 11.9 products held by its customers (18%); Bendigo Bank provides 2.3 out of 8.8 (26%) and St George provides an average 2.6 out of 10.1 products held each customer (26%).
This article was first published in our sister publication, Australian Broker.