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Annual Best Practice Reports - Americanization of Transaction & Savings Accounts
Retail Finance Intelligence (RFI), Dec 2009, Pages: 22
Australia’s transaction and savings account landscape is currently experiencing a particularly vibrant period in terms of newly available accounts, among them a number of game changing propositions. But why are banks willing to take risks in offering new products during an economic crisis?
The influx in savings, caused by the Government’s Deposit Guarantee and customers looking for security in uncertain times, has guaranteed an increase in savings and deposits on the part of financial institutions. This creates an environment in which banks are guaranteed business to a degree, and either can take risks due to the fact that the repercussions are minimal compared to new business or because this needs to be done to differentiate from the other institutions in order to secure a larger proportion of this new business.
This report discusses the motivations behind new products in the savings and deposits arena, and looks at specific best practice examples of current offerings. The report discusses St George’s SENSE product, ANZ’s Smarty Pig account and Bankwest’s “Happy Banking” initiative, each of which are compared to similar propositions in the US market. Research produced by RFI surveys, which have examined the behaviour of transaction and savings account customers, is used to show why these are successful attempts at introducing and targeting new and exciting products.
Scope and methodology
This report uses data from the June 2008 and June 2009 savings account surveys conducted by RFI.
The RFI surveys:
- Are nationally representative
- Contain results from 2,000 savings account holders
- Examine the habits of savings account holders, in addition to features that they are looking for in a savings account
Highlights
- The economic environment created by the financial crisis has meant that savings and deposits have become more attractive while the share market and property market have shown volatile returns for investments. With customers moving towards savings and a sense of security, a number of new products have emerged in the savings and deposits market.
- The products discussed within this report are similar to propositions which were released earlier in the US market, and as a result available data can be used to measure their level of success. The “round-up” feature of St George’s SENSE product was introduced as “Keep the Change” by the Bank of America, while SmartyPig was first introduced in the US and Bankwest’s “Happy Banking” initiative is heavily inspired by the New Jersey-based Commerce Bank.
- “Keep the Change” was a success in terms of innovation and account uptake, while the repeated and multiple use of SmartyPig indicate that this product has resonated with both the intended audience and others. The unique model of Commerce Bank also proved to be an overwhelming success in terms of innovation.
Reasons to read this report
- Understand the reasons behind the current influx of innovative offerings within Australia’s savings and deposit market
- Understand the game-changing propositions on which these products are based
- Gain insight into why these propositions were a success in the US market
Country covered: Australia
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