Bad news for banks

Australia’s major banks should not feel too sanguine about holding onto customers, with a new survey released today revealing that 80 per cent said they would be prepared to switch to a new financial services provider.

The survey of more than 26,000 retail bank customers, launched today by Fujitsu Consulting, titled ‘Toxic servicing: eroding profitability in the financial services sector’, cited poor servicing (31 per cent) as the number one frustration among financial services customers — three times greater than the next biggest frustration, which is complex terms and conditions (10 per cent).

Commenting on the survey outcome, Martin North, managing consulting director, Fujitsu Australia and New Zealand, said: “Contrary to what many financial services businesses assume, price is not the primary driver of customer churn”.

“Our research shows that, in reality, poor service is the number one ‘toxic’ issue driving customer churn in the financial services industry,” he said.

“Despite significant inertia, customers who are exposed to toxic servicing are highly likely to switch providers.”

North said examples of toxic servicing include being passed around a call centre, having the phone put down on them, poor product knowledge among branch staff and hidden fees and charges.

As a result of these issues, 80 per cent of survey respondents said they would consider switching banks, while 26 per cent said they would switch to find a better rate and 23 per cent were looking for better service.