Banking Review

BankWest competing on price instead of process

The latest APRA statistics on deposits are proof that a price-competitive product offering is no guarantee of market share, with BankWest losing another $219 million (1.5 per cent) in February, on the back of its $163 million outflow in January.

Unless its new Smart eSaver turns the tide, BankWest’s new parent could be forced to take drastic action. A Retail Banking Review/CoreData poll in February revealed the bank stands to lose up to one in six customers as a result of its merger with the Commonwealth Bank, with 16.7 per cent saying they plan to leave the bank in protest.

The other recently merged bank, St George, fared comparatively well in February, growing its holding of household deposits by $363 million (a little under 1 per cent).

In the face of negative publicity over job losses (which CBA said were unlikely to occur), BankWest faces an uphill battle for the hearts and minds of cashed-up consumers.

BankWest head of mortgages and savings Paul Vivian told Retail Banking Review the bank will continue to pursue its own product strategy, independent of the Commonwealth Bank, and continue to bring new products to market.

“We’ve been conscious in the last few months that we wanted to put something else new into the online savings channel. The Telenet Saver has been around since 2004 and we were quite keen to refresh our proposition.”

Vivian says there is also the opportunity to increase cross-sales between the bank’s highly competitive transaction accounts and its online savings offering. “We’ve seen some very strong flows into our transaction accounts over the last six months and generally we see very strong cross-sales with the Telenet Saver, and we expect the same with the Smart eSaver.”

One important shortcoming of the product is its lack of straight-through online acceptance without the need for a signature, a service already offered by ING DIRECT and RaboPlus, and under scrutiny by all of the major banks. Vivian says “We’re investigating how effective we can make our process, but at this stage it’s still a two-stage process.”

With investors still leaning towards cash, BankWest should be able to pick up some market share, but the landscape is likely to shift if investors begin to switch back into equities.

The large number of new online savings and investment products means banks will need to compete on something other than price – brand and process being the two obvious choices.

Bendigo and Adelaide Bank’s ongoing household deposit gains are testament to the role of brand. Process is a more interesting one. We’re yet to see marketing along the lines of ANZ’s 60-second credit card approval for deposit products. Perhaps it’s time we did?