Of those, 855,000 people ended a relationship with a bank; 18,000 people stopped dealing with a building society; 65,000 stopped dealing with a credit union; and 140,000 with another financial institution, according to the Roy Morgan Research Consumer Single Source survey.
The key reasons why people switched their main financial institution include high fees and charges, poor service and poor interest rates, said Norman Morris, Industry Communications Director for Roy Morgan.
The greatest outflows by customer percentage were seen at cash and term deposit specialists BankWest and ING Direct, with BankWest seeing 46,000 or 5.6 per cent of customers depart, while 43,000 left ING Direct (5.2 per cent).
Among the big four ANZ saw the biggest outflow by customer percentage (4.0 per cent or 157,000) followed by Westpac (3.0 per cent or 108,000). CBA saw the biggest outflows by number (192,000 or 2.7 per cent of customers) while NAB was the lowest by total and percentage (70,000, 2.3 per cent).
“At a time when people are continuing to find it easier to swap financial institutions, many of the banks are placing a strong focus on customer retention and are keen to increase the value of the relationship,” Mr Morris said.
“While tracking and benchmarking the proportion of lost customers is an important measure, it is interesting to note that the potential value of these lost relationships will vary across the banks.
“For instance, the potential lost opportunity on people who stopped dealing with CBA is the 7.9 financial products they hold anywhere, compared to 8.7 products by those who ended their relationship with ANZ and 10.7 products held on average in total by lost Bankwest customers.”
Mr Morris said banks should look at which financial institutions their lost customers are now choosing to deal with to gain an understanding of the reasons behind their choice.
The survey was based on a representative sample of 25,132 consumers, of whom 1,371 stopped dealing with a financial institution in the past 12 months, Roy Morgan stated.
In an unrelated study, Brisbane-based consulting firm Engaged Marketing looked at consumer loyalty towards Australian financial institutions and found second-tier banks comfortably outperformed the four majors, with credit unions significantly better again.
The group’s 2013 Financial Institution Consumer Recommendation & Loyalty study used a net promoter score (NPS) benchmark, with Bendigo the best of the four major and four second-tier banks with an NPS of 11.57 per cent, just ahead of Suncorp at 11.25 per cent.
By category, credit unions scored an NPS of 28.57 per cent; second-tier banks scored an NPS of 6.32 per cent; and the four majors achieved an average NPS of -15.51 per cent. NAB was the best of the majors at -8.59 per cent NPS. The overall industry NPS was -5.56 per cent.
The benchmarking study ranks high profile organisations and is based on more than 3,360 consumer responses Australia-wide, Engaged Marketing stated.
Engaged Marketing founder and managing director Christopher Roberts said the low NPS scores across financial institutions generally show that good service is not enough to earn a customer’s recommendation.
“Banks must do more than merely provide satisfying service by delivering positive emotional experiences that are worthy of recommendation. This is the crucial factor that can send the NPS of the overall banking industry on an upward trajectory,” Mr Roberts said.
“Smaller financial institutions such as credit unions and building societies have a more personal touch, ensuring their customers feel cared for and valued. This allows them to leverage the most effective marketing channel, their very own customers, who can spread the word to family and friends.”
