SYDNEY, May 1, 2024 – Five years after the conclusion of The Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry (Financial Services Royal Commission), 70% of Australians say that their relationship with their banks is unchanged. Contrary to that, the majority of Australians (74%) expect banks to offer personalised services and conversations. Interestingly, customers associate these expectations with physical channels rather than digital ones, even as banks continuously reduce their branch footprint in Australia.
These are the findings of the Publicis Sapient Customer Banking Report 2024, which interviewed more than 5,000 Australians from all walks of life to gauge their expectations, experiences, and perspectives of the country's banking sector. The report explored the major issues facing Australian financial services such as: Do banks truly understand what consumers expect from them? Are banks creating real value and differentiation in their digital channels to reduce physical channel presence? And, what’s the role of AI in all of this?
The role of omnichannel personalisation is increasingly critical for Australian banks, with customers wanting improved digital banking, especially regarding customer service (49%).
While AI is a key enabler of digital personalisation, the research reveals only 58% of Australians believe that AI will improve the level of service from their banks. Almost all Australians (96%) express concerns about banks using AI, with the strongest concerns raised being that Australians prefer to speak with a person (58%), that people will lose their jobs (54%), and data security and privacy (49%).
The research also shows expectations have skyrocketed concerning the cost of living, with 92% of Australians expecting their banks to provide support to customers in financial stress before it is too late. Furthermore, 98% of Australians want their banks to help them if they were to fall victim to financial scams.
Tales Sian Lopes, Head of Financial Services, Australia & New Zealand, Publicis Sapient, said: “Australian banking is at a crossroads, where the ability to adapt, innovate and deliver a seamless customer experience will determine the market leaders of tomorrow. All consumers want is the basics done brilliantly, but with customers associating this with branches at a time when most banks are cutting their physical footprint – data and digital experience are the battleground of the future.”
“One of the key challenges facing Australian banks is harnessing AI as an enabler to support the delivery of the personalised services that people are increasingly demanding, whilst also showing customers that they are engaged in the safe and ethical application of these fast-emerging technologies. There is an enormous opportunity for banks to proactively design a better customer experience,” he added.
The Publicis Sapient Customer Banking Report 2024 identifies several key trends that will empower Australian banks to meet customer demands and successfully navigate the future.
1. Shifting perceptions of banks post the Royal Commission
Despite significant improvements in the banking industry since the Royal Commission recommendations of 2019, over half of all Australians surveyed (56%) do not see any changes in how their banks operate. The research revealed that a significant majority of Australians (83%) can identify a positive trait of banks, while 69% can identify a negative one, with the top negative perceptions being that banks are expensive (37%) and unaccountable (23%).
2. Evolution of branches
Physical branches continue to play an important role for most Australians, with 72% visiting a branch in the past six months. Even as banks envision a future where most financial interactions occur through digital channels, a majority of customers (70%) are not in favour of eliminating cash services from branches, with more than three in four customers (76%) still carrying cash on them. Despite the desire of Australians to be able to use cash, card and digital payments are the preferred methods of payment, with 53% mostly using cards and 25% using a mix of cards and cash.
3. Robust security and scam prevention
Most Australians (83%) are confident in their bank’s security and scam prevention measures, and nearly all (98%) expect banks to offer support if they were to fall victim to a scam. However, just over half (58%) of those who were a victim of a scam, found their banks to be helpful when providing them assistance during this challenging situation, whilst 42% expressed dissatisfaction with the support experience itself, particularly commenting on slow response times.
4. Need for financial wellbeing amidst cost-of-living crisis
Over two-thirds (79%) of Australians have expressed the need for proactive financial stress support to cope with the cost-of-living crisis, including flexibility or temporary relief in loan repayment terms (50%), fee waivers and reductions, especially for essential daily living (44%) and interest rate adjustments (42%).
5. Shift towards socially responsible banking
The younger generation is more concerned about social responsibility, with a majority (75%) of Australians supporting a bank that is committed to green initiatives and providing green products. Those under 45 years of age are the most supportive of green initiatives, while those least likely to support green products are over 65 years old.
“For Australian banks, enhancing accountability and trust while demonstrating societal benefit is now more critical for customer retention. With the cost-of-living crisis impacting Australians’ financial wellbeing, banks would do well to build a comprehensive toolkit of financial wellbeing intervention techniques, which they can deploy proactively when the data suggests customers are at risk of falling into financial stress,” said Tales Sian Lopes.
“At the same time, younger Australians are also more discerning about social responsibility. Banks should be thinking beyond existing products and business models towards social and environmental options as a long-term growth strategy,” he added.
