Big banks grow share of wallet

Big banks grow share of wallet

Australia’s big banks are managing more customer wealth today than they were 10 years ago, indicating a strong brand loyalty from Australians that could increase further in the future. 

New research from Roy Morgan shows that over the past decade, most of Australia’s largest banks (including the Big Four) have increased their share of their customers’ dollars, including loans, accounts and credit cards, also known as their “share of wallet”.

Key findings of this research include:

  • Each of the Big Four increased their Share Of Wallet, with CBA up 7.4% to 60.4%, ANZ 5.2% to 52.4% NAB 4% to 55.3% and Westpac by 1.3% to 52.5%
  • Only three of Australia’s 12 leading banks experienced a reduction in Share Of Wallet since 2007, with Bankwest decreasing -1.2% to 56.5%, Bank of Queensland by -8% to 45.4% and Macquarie by -2.4% to 37.4%.
  • BankSA and Bendigo bank experienced the biggest growth in Share Of Wallet, each experiencing an increase of over 12%.
  • The banks found to have the largest Share Of Wallet were Bank SA and CBA, each with over 60%.

It’s important to note that these Share Of Wallet stats don’t necessarily reflect the financial activity of all Australian bank customers. According to Roy Morgan, nearly three quarters of the total value of banking products comes from the top quintile (or 20%) of banking customers, with a minimum value in banking products (including loans, accounts and credit cards) of $466,000.

According to Roy Morgan Research industry communications director, Norman Morris, Share Of Wallet is one of the best metrics for tracking brand loyalty in bank customers:

“Results in this survey show that it generally takes time to improve ‘share of wallet’, as evidenced by the fact that the major banks have taken a decade to show significant improvement.

“There is a strong indication that the major improvement in customer satisfaction with banks over this period is likely to have contributed to this positive trend in ‘share of wallet’.”

“There remains considerable opportunity for banks to increase business with their existing customers as they are currently only capturing around half of what is possible.”

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Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

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While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

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Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

What are the requirements of an ING Bank locked savings account?

An ING bank locked savings account - also called a term deposit - offers you interest in exchange for holding your money for a period of time.

The terms offered include as little as 90 days or as long as two years. Generally, the longer you lock your money away, the higher the rate of interest. 

The minimum deposit amount for an ING locked savings account is $10,000. 

To be eligible to apply, you must: 

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Do banks run credit checks on savings accounts?

When you apply to open a new savings account, some providers may conduct a credit check, meaning that they will ask a credit bureau for your credit history. This isn’t always the case on savings accounts though and depends on the provider, as you aren’t borrowing money. 

As you are opening a savings account and not borrowing funds, this credit check is considered a soft inquiry and should not affect your credit score. If the bank has run the credit check, you can often still open a savings account even if you have a poor score, provided you meet other requirements. 

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

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Do I have to claim interest on my savings account?

When you lodge your income tax returns, you must include in the documentation all your sources of income, including bank interest. Your bank will report any interest you earn on the funds in your savings account to the Australian Tax Office (ATO). When the ATO then compares this information with your tax returns,  you also need to have mentioned the interest earned. If there is any discrepancy, you’ll receive a letter from the ATO. 

Avoid this situation by ensuring you receive your bank statement with interest noted. Then declare the interest in your tax returns and pay the tax that’s applicable based on the income tax rate.

You only need to claim your share of the interest earned for joint accounts. If you manage an account for your child and receive or spend money via this account, you will also need to report any interest earned from said account.

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A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

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A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

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It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

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A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

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