National Australia Bank was the only major bank to record a fall in business customer satisfaction rates in January, according to the latest Business Financial Services Monitor.
NAB fared particularly badly among smaller businesses, although the bank will hope that its high profile ‘break up’ marketing campaign, launched on 14 February, will see a turnaround in its future fortunes. The latest results, released by DBM Consultants, reveal Westpac, CBA and ANZ all recorded scores in January consistent with December, with Westpac maintaining its lead.
Apart from NAB, the ratings stabilised after two consecutive months of declines in November and December, primarily triggered by the November rate rise.
DBM managing director Dhruba Gupta says the impact of the hike appears to have been short term.
“The exception was NAB, which recorded a lower satisfaction result for the third consecutive month and it trailed its peers in rank. This follows NAB’s issues with its payment processing in November and December,” Gupta says.
“Interesting, for most banks, the dissatisfaction was confined to the micro businesses.”
Among the micro businesses, which represents businesses with a turnover of less than $1 million, Westpac and ANZ scored 7 out of 10 for business banking satisfaction, while CBA scored 6.9 and NAB lagged behind at 6.7.
ANZ also scored 6.7 out of 10 among the small business segment, representing businesses with a turnover of between $1 million and $5 million, while the other banks scored between 7 and 7.3.
Gupta says Westpac holds equal first position in the micro, small and medium markets, while CBA’s consistency overall and strength in the large segment have provided it with equal or sole first position in all segments and the total market.
“ANZ has been steady in micro and improved in all other segments. It has now closed the gap with the leading majors,” Gupta says.
“NAB experienced upward movement in the medium and large segments, though its decrease in micro had the greatest influence, resulting in an overall drop in satisfaction.”
Earlier this month, NAB caused controversy with the launch of its “Break up with your bank” campaign, targeting CBA and Westpac home loan customers.
NAB has promised to pay the $700 mortgage early exit fee for CBA and Westpac customers switching to NAB “to encourage fairer banking for everyone”.
Both the CBA and Westpac have since taken out pull page advertisements in major newspapers, urging businesses to switch accounts and transfer their loans over to them.
The CBA has offered to pay $1200 to home loan customers who switch from NAB, and is attempting to lure NAB’s business customers with the phrase “Don’t get nabbed by a liquidity margin”.
According to the CBA, NAB has been secretly increasing a liquidity margin above the standard reference rate that it requires its business customers to pay.
Late last year, NAB increased its margins by 0.3% annually to a total of 0.95% above the base rate, while the CBA says it does not charge a liquidity margin.
Meanwhile, Westpac is promising to waive establishment fees for new customers and will pay up to $20,000 in switching costs including legal charges, mortgage registration and transfer fees.
According to Westpac, a business seeking to borrow $1 million will save $1,600 while commercial customers seeking as much as $20 million could save up to $20,000.
Westpac is hoping the campaign will increase business banking inquiries by 25% to 30%, believing NAB customers will be the easiest to win over because they are the least satisfied.
Gupta says business loans are a fiercely competitive market worth around $670 billion, and small shifts in that share can therefore mean a lot.
He believes the banks are “quite serious” in their latest offerings and businesses should definitely consider switching, but only after they have compared all that is on offer, including from ANZ.
ANZ is the only bank yet to be drawn into the price war, with ANZ chief executive Mike Smith stating he has no intention to launch such a campaign.
Peter Strong, executive director of the Council of Small Business of Australia, has criticised the bank’s respective campaigns, arguing they fail to make lending any easier or cheaper for small business.
“I’ll start paying more attention when small business lending conditions improve. These advertising campaigns are a mere distraction,” Strong says.