It takes a lot to make New Zealanders change banks, say NZ's minnows

Monday, 28 May 2018

Customers are reluctant to shift because they think it's difficult, says Co-Operative Bank CEO David Cunningham.

Revelations of poor conduct by the big Australian banks haven't been enough to encourage their New Zealand customers to shift their business, this country's small banks say.

Both SBS and The Co-Operative Bank reported their financial results on Monday.

They said, while their customer numbers were increasing, there had been no sign of a New Zealand customer response to the Australian Royal Commission of Inquiry into Misconduct in the banking sector.

The inquiry revealed widespread instances of banks putting profit before customers.

* Banks told: Front up with evidence

Neither SBS nor the Co-Operative Bank are seeing customers shift because of conduct concerns.

* Australian banking review is overdue in NZ too

David Cunningham, chief executive of The Co-Operative Bank, said about 14,000 new customers joined his bank over the past financial year.

But there was no evidence that the Australian inquiry had prompted anyone to move.

'There really isn't evidence of that in New Zealand. There is a different culture and conduct overall.'

The Co-operative Bank will pay out more than $2 million in rebates to customers this year. Its ownership structure gives customers a stake in the business.

It announced a profit of $10.5m, up 1.3 per cent, for the year ending March 31.

Cunningham said customers were more concerned about the scale of banking profits being sent to Australia each year.

The big four deliver profits of about $5b annually to their Australian parents.

New Zealand-owned banks have about 5 per cent of the market.

Cunningham said customers were reluctant to shift because of a perception that it was difficult.

'The reality is that couldn't be further from the truth. The process to switch is really easy.'

He said customers generally had to be very frustrated to go through with a change.

'People think it's not so bad. It might not be perfect but at the end of the day, as long as the eftpos card works they are happy enough.'

Most customers who changed to The Co-Operative Bank were referred by existing customers, he said.

SBS, meanwhile, agreed that the Australian problems had not registered as a driver for bank customers who shifted. SBS Bank reported an operating surplus of $35m for the year.