How the Royal Commission and Open Banking will impact the future of banking
In the wake of the Banking Royal Commission and with Open Banking legislation looming, finance marketers will be forced to communicate authenticity in order to get disenfranchised consumers back on board.
This article was sponsored by ThinkTV to let readers know about ‘The Future of Banking’ report »
The Royal Commision into the Australian banking sector delivered a serious blow to the state of trust for the entire finance industry. People have always been sceptical of banks, but several months on, the fallout from the Royal Commission is revealing stronger sentiments of betrayal and agnosticism.
According to a new report from ThinkTV, ‘The Future of Banking’ – the first in ThinkTV’s ‘Future Series’ – 27% of consumers are now more likely to change banks in a post-Royal Commision era.
It’s understandable for consumers to be frustrated with the current financial climate in Australia, but it means banks will have to step up their game in every vertical. In the wake of the Royal Commision, banks will also have to contend with the impending Open Banking regime – allowing consumers better control over their personal data and more accessible comparison options between banks.
This is a good thing, for both consumers and banks.
As the long-established banking oligopoly begins to show cracks, it’s now up to banks to truly compete on their merits; demonstrating their excellence rather than just talking about it.
‘The Future of Banking’ report also found that consumers have a healthy curiosity in the banking sector, with 67% of consumers saying they have an interest in banking and finance, 50% saying they are keeping an eye on banks and 21% staying connected with their bank via advertising. Moreover, a third of respondents say they notice ads from their own bank more than others.
Who’s on the ropes?
With 27% of consumers considering switching banks, it’s important for financial institutions to know who’s closer to the edge.
According to the report, those changing jobs (43%) and entering a new relationship (44%) are the most likely to switch banks. Between the genders, male consumers are more likely to switch than female consumers, at 30% and 24% respectively.
The younger bunch seem to be at a lower risk of switching banks – 23% of those between 18 and 24, 29% of those between 35 and 44 and 32% of those between 45 and 54.
According to the report, in a time of Open Banking and reduced loyalty, “both offensive and defensive tactics” will be required for banks looking not only to acquire new customers, but hang on to existing ones.
Open Banking will enable the banking population more tools of comparison and make it significantly easier to transition from one bank to another. This means it is now more important than ever for banks to develop a sound advertising and communications strategy. Without one, consumers are prime for the poaching. Of those consumers looking to change banks, half are looking outside the so-called ‘big four’ – Westpac, ANZ, Commonwealth and NAB – at alternative financial institutions.
According to research conducted by Ebiquity in 2017 as part of the ‘Payback Australia Study’, of the channels, TV offers banks the most efficient ROI compared to other media – with every $1 spent returning $5.30 while online display ads return only 40c.
Furthermore, TV appears to do the heavy lifting in the advertiser’s media mix. According to the same Ebiquity study, even with the average campaign spending 33% of budget on TV, it delivers 80% of sales attribution.
According to the results ThinkTV’s ‘Benchmark Series’ from last year, advertisers can also bank on TV and broadcast video on demand (BVOD) to deliver prolonged brand salience. Analysing an ad’s ability to impact sales over time, the report found that the decay rate on TV and BVOD was significantly less dramatic when compared to digital channels such as YouTube and Facebook.
ThinkTV has six recommendations for the financial sector in terms of marketing and awareness:
- Get active in market
- communicate your USPs
- showcase your relevance
- personalise at scale
- stand out, and
- leverage the benefits of TV and BVOD.
To learn more about the impact of the Royal Commission and Open Banking on the financial sector, and how finance marketers will have to evolve in order to thrive in a new era, download ThinkTV’s ‘Future of Banking’ report today »
Image credit:Raj Eiamworakul