Customer choice in retail banking has been an important focus for Australian policymakers and regulators since the 1980s, and this continues to be a central topic in the public policy landscape.
Recent policy discussions have focussed on competition in the banking sector, covering financial services from wealth management to personal banking, notably through The Financial System Inquiry (2014) and the Productivity Commission (2018).
In August 2018, the Productivity Commission released its final report on Competition in the Australian Financial System. One area of focus in the Productivity Commission report was customer choice and switching in retail banking. This echoes previous public reviews and reports, which see switching as an important indicator of the health of the industry.
Although switching is an important indicator of consumer behaviour, it is not the only indicator of competition in a market. There are other indicators of overall competition, such as the concentration of financial services providers; incentives and ability for incumbent players to innovate; and the presence and severity of barriers to entry for new players.
Additionally, it is important to understand switching in the wider context of choice in banking. The extent to which consumers are able to make informed choices, and the extent to which they are satisfied with these choices, can provide contextual evidence to inform an analysis of switching and competition in retail banking.
This report explores the choices that consumers face throughout their relationship with their banking providers, from purchasing a product to re-evaluating whether the provider is meeting their preferences.