Westpac has re-launched its Bank of Melbourne brand in Victoria, although new figures show small businesses see little difference between the major banks and their regional counterparts.
According to Westpac, Victoria is missing out on “local” banking. In other states, regional banks have about 22% of the market but in Victoria, that figure is just 13%.
“What we confirmed was that the difference was psychographic, not geographic,” BoM chief executive Scott Tanner says.
“Victorians weren’t different from the rest of the country… When we did the research, approximately 50% of people said they would prefer to bank with a local bank.”
The research also revealed the St George brand wasn’t cutting it in the Victorian market. While it was popular among existing St George customers in Victoria, it didn’t resonate with new customers.
Meanwhile, Victorians still had a soft spot for the Bank of Melbourne brand, particularly after it was taken out of the market by Westpac in 2004.
Westpac now plans to position Bank of Melbourne as an independent regional bank as it seeks to boost market share across Victoria.
But according to new research from DBM Consultants, small businesses see relatively little difference between the major banks and their regional bank “brands”.
New data – based on an annual survey of 19,250 decision-makers in business banking – shows only a small difference in average business satisfaction between the big four and their regional brands or “allied” banks.
In June 2011, satisfaction with the big four among micro and small businesses averaged 7.1 out of 10, compared to an average of 7.4 with the allied banks.
This represents a satisfaction gap of only 0.3 points, which has shrunk from 0.6 points since January 2011.
However, regional banks that operate independently of the big four, such as Bendigo Bank and Bank of Queensland, enjoyed much higher levels of business satisfaction, with an average score of 8.2 points in June 2011.
Micro and small businesses are defined in the data as those with annual turnovers of less than $5 million. They account for 97% of all businesses by number in Australia, and are a prime target for regional banks.
DBM chief statistician John Hinchy says the data shows the major banks should not expect customers to see regional allied banks in the same way they see independent, regional banks.
“Business customers don’t buy the branding story. That doesn’t mean they rule out a regionally-branded unit of one of the big four, but these brands are not the marketing opportunity that many might have believed,” he says.
“Business customers look closely at the merits of what’s on offer and they seem to have a real awareness of the big four parent that’s in the background.”
Hinchy says while small businesses often have a secondary banking relationship with allied and regional banks, they typically regard one of the big four as their main financial institution.