Australian Consumer Deposits 2010 - Market Research Report On Aarkstore Enterprise

Introduction

Introduction

Australian retail deposits customers remain the key focus for all financial services (FS) providers. However, given the increasing competition within this space, FS providers need to understand each of the consumer segments and devise appropriate strategies to achieve their long-term objectives. This report assesses consumer attitudes towards transaction and savings accounts in Australia.

Scope

*Assesses the current state of Australian deposit consumers

*Investigates consumer attitudes in using their deposit products

*Analyzes switching factors and the underlying reasons to switch products

*Suggests some opportunities in targeting specific consumer segments

Highlights

In the context of Australian FS providers, the importance of a segmented-strategy approach is becoming apparent, allowing as it does FS providers to identify and target the most attractive segments to achieve their goals as competition in retail deposits intensifies.

Understanding needs among different consumer segments are crucial. For example, Gen Ys are twice as receptive as Gen Xs to special offers on deposit products and they rank fees and interest rates higher than any other age group.

This report provides actionable insights, such as targeting younger generations and using alternative communication channels to integrate within consumer lifestyles, and also provides lessons on product design from overseas.

Reasons to Purchase

*Understand the current mindset of Australian deposit consumers

*Identify the main factors to attract specific consumer segments in retail deposits

*Provide actionable insights on how to approach Australia deposit consumers after the global economic crisis

Table of Contents :

Overview 1

Catalyst 1

Summary 1

Executive Summary 2

Understanding consumer behavior across the four stages of the product cycle 2

Consumers are looking for independent sources of information 2

Online applications for savings accounts are increasing 2

Internet banking has become a common way of banking 3

While a minority have switched, it does not mean that the majority are happy with their transaction provider 3

Targeting specific consumer deposit segments 4

Youth banking programs serve to acquire new customers at an early stage of their banking 4

Reaching deposit customers through social media 5

Premium transaction accounts may reach niche consumer segments in Australia 5

TABLE OF CONTENTS 6

Table of figures 7

Table of tables 8

Understanding Australian Deposit Consumers 9

The shape of Australian retail deposits 9

Both the savings and transaction accounts markets are extremely competitive 9

Changes in regulations drive consumers behavior 9

Big banks claimed the majority of deposits in the last 12 months 10

In the past year, 87% of household savings went to the four major banks 10

The major banks act as main financial institutions for 64% of Australians 10

FS providers in Australia need to identify and target the most attractive segments 11

The importance of a segmentation strategy in a mature market cannot be underestimated 11

New products launched in the last 12 months are focusing on specific consumer segments 12

Four important segments based on Australian demographics 12

Consumer Insights: Understanding the Four Stages of the Product Lifecycle 13

Research: a process of narrowing down choices based on consumers needs 14

Consumers are looking for independent sources of information 14

Different consumer segments have different reasons to choose their provider 17

Gen Ys are price-sensitive, and look for independent opinions and special offers 18

Gen Xs are likely to go with their mortgage provider or take product bundles for a transaction account 18

Baby Boomers value convenient banking and good service 18

Retirees look for service, stability and security 18

Apply: a step to win customers 19

Branch is still a dominant channel through which to apply for a transaction account 19

Online applications for savings accounts are increasing 20

Consumers are still facing low level of experience in applying online deposit products 21

Use: a process for consumers to test the products/services 23

Electronic transactions are dominating consumers banking 23

Internet banking has become commonplace 24

Online savings accounts are popular among consumers 25

Most Australian consumers hold both their transaction and savings account with one provider 25

Gen Xs represent more disciplined savers than any other group 26

Switch: a result of a mismatch between product/services and their users 26

While a minority have switched, it does not mean the majority are happy with their transaction provider 26

ANZ claimed the most number of consumers who have switched 28

Other than fees, convenience factors are clear drivers of consumer switching 29

Good service is the key factor to retaining savings account customers 30

Targeting Specific Consumer Deposit Segments 31

Youth banking programs serve to acquire new customers at an early stage of their banking 31

Acquiring custom by integrating with early stages of consumers lifestyles is a sound strategy 31

CBA has 41% penetration of customers at an early age (18-30 years old) 31

CBA customers as a whole join the bank at a younger age than any other banks consumers in Australia 31

Case study: CBAs youth banking programs 32

School banking programs 32

Engaging young generations through online mini-sites and merchandize 33

Premium transaction accounts may reach niche consumer segments in Australia 34

The trend of premium transaction accounts has seen growth in the UK 34

Premium transaction accounts target the young and wealthy segment 35

Premium transaction accounts represent a new opportunity in the Australian retail deposit market 37

Reaching deposit customers through social media 37

Gen Ys look for opinions from someone on deposit products, but not from a bank 37

Community involvement needs to include social media 37

APPENDIX 39

Definitions 54

Bonus savings account 54

Cash management account (CMA) 54

Direct charging fee 54

Main financial institution (MFI) 54

Mortgage Offset Account 54

Online savings account 54

Retail deposits 54

Methodology 54

Further reading 55

Ask the analyst 55

Datamonitor consulting 55

Disclaimer 55

LIST OF TABLES

Table 1: Banks sources of funding, 2005-09 9

Table 2: What sources of information did you use when choosing your provider of main transaction account? 2009 - 2010 39

Table 3: Responses to the question What sources of information did you use when choosing your provider of main saving account?, 2009-10 40

Table 4: Responses to the question What sources of information did you use when choosing your provider of main transaction account?, by demographic, 2010 41

Table 5: Responses to the question What sources of information did you use when choosing your provider of main saving account?, by demographic, 2010 42

Table 6: Responses to the question Why did you choose this provider for your main transaction account?, by demographic, 2010 43

Table 7: Responses to the question Why did you choose this (savings) provider?, by demographic, 2010 44

Table 8: Responses to the question How did you make the initial application for your main transaction account (account for everyday banking and transfers)?, by demographic, 2010 45

Table 9: Responses to the question How did you make the initial application for your main savings account (account where money is saved for longer period)?, by demographic, 2010 45

Table 10: Responses to the question How did you make the initial application for your main savings account (account where money is saved for longer period)?, 2009-10 46

Table 11: Preference of applying for savings accounts, 2010 46

Table 12: Responses to the question What are the obstacles for you applying for financial products over the internet?, 2010 47

Table 13: Responses to the question How often have you conducted banking through these channels in the last month?, 2010 47

Table 14: Responses to the question How often have you conducted banking through these channels in the last month?, proportion of transaction, by demographic, 2010 48

Table 15: Responses to the question How much do you currently have in your main savings account?, 2010 48

Table 16: Market share of main savings account, by number of savings accounts, 2010 48

Table 17: Responses to the question Have you switched your main transaction account provider in the last 12 months?, 2010 49

Table 18: Responses to the question Why did you switch your main transaction account provider?, 2010 49

Table 19: Responses to the question Why havent you switched your main transaction account provider?, 2010 49

Table 20: Switching destination for transaction account, 2010 50

Table 21: Responses to the question If you were going to change your transaction account provider, which of the following would be important considerations?, by demographic, 2010 51

Table 22: Responses to the question Have you switched your main savings account provider in the last 12 months?, 2010 52

Table 23: Responses to the question Why didnt you switch your main savings account provider?, 2010 52

Table 24: Proportion and average entry age of banks 18-30 year old main financial institution customers 53

Table 25: Responses to the question How important to you are bundled extras with a monthly fee (e.g. free travel insurance, breakdown assistance) in a current account?, by income bracket and age group, 2010 53

LIST OF FIGURES

Figure 1: Better competitor pricing has become the main reason for people to switch their transaction account 4

Figure 2: Understanding differences and similarities in consumer behavior is the key to a good segmentation strategy 11

Figure 3: The four stages of the product lifecycle 13

Figure 4: Advice from friends, family or colleagues is the number one source of information 14

Figure 5: Source of information to choose a provider of main transaction account, by demographic 15

Figure 6: Source of information to choose a provider of main savings account, by demographic 16

Figure 7: Different consumer segments have their own reasons for choosing their deposit provider 17

Figure 8: Most people apply for deposit products through a branch 19

Figure 9: Increasing popularity of online application for savings account, 2009-10 20

Figure 10: Consumers want to avoid the branch and use the online channel to apply for savings accounts 21

Figure 11: The lack of personalized banking is a barrier to online applications 22

Figure 12: Younger generations are conducting more banking than those in older segments 23

Figure 13: Older generations perform a higher share of their banking through branch and internet banking 24

Figure 14: The majority of consumers savings accounts are online savings accounts 25

Figure 15: Better competitor pricings have become the main reason for people to switch their transaction account 27

Figure 16: More people switch to ANZ than other FS providers 28

Figure 17: Convenience factors serve as important switching triggers 29

Figure 18: Consumers stay with their savings account provider due to good service 30

Figure 19: Reaching MFI customers at an early age may build a stronger MFI consumer base 32

Figure 20: Dedicated mini-sites for all stages of young generations 33

Figure 21: Lloyds TSBs Added Value Accounts offer a wide range of services to consumers 35

Figure 22: Bundled extras with a monthly fee attract young and wealthy individuals in the UK 36

Figure 23: Three functions of social media for FS providers 38

For more information please visit :

http://www.aarkstore.com/reports/Australian-Consumer-Deposits-2010-62636.html

by: Aarkstore Enterprise

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