Banks often struggle to convince analysts and investors that the so-called “soft metrics”, such as customer satisfaction, or investments in add-ons like money management tools have any significant impact on the bottom line. Commonwealth Bank chief executive Matt Comyn had a crack at convincing the market last week.
CBA claims to have the highest net promoter score among the big banks in retail, business and institutional banking. It also claims the highest “main financial institution” shares in retail and business banking.
Much of that satisfaction in retail is driven by the development of services such as Yello, which was launched in 2022. Yello is a rewards program offering cashbacks, discounts and rewards.
CBA said it has three million customers using Yello and gets 100,000 visits a day to the Yello Hub.
Other programs include Kit, a pocket money app, and Benefits Finder, which helps customers identify rebates and concessions they are eligible for.
The business banking division has followed a similar strategy, using partnerships, digital services and greater specialisation to differentiate the bank, improve customer experience and increase engagement.
These include a partnership with Pairtree, a data services company that provides agribusiness information to farming customers; doshii, which integrates point of sale systems; and whitecoat, a healthcare payments business.
The bank said a benefit of the high level of engagement that comes through these tools is that it gets a better understanding of its customers’ needs and risks.
Comyn said the value creation in all this comes in the form of a high level of “stable, low-cost deposit funding”.
Retail transaction account numbers grew 6 per cent in 2023 and business transaction account numbers grew 10 per cent. The bank has a 26.6 per cent share of household deposits.
Total group deposits of A$872 billion account for 75 per cent of total funding.
While deposit price competition and deposit switching were factors contributing to an erosion of margins during the December half-year, the bank still holds a large amount of low-cost and non-interest bearing deposits.
At the end of December, $52 billion non-interest bearing retail deposits accounted for 12 per cent of domestic retail deposits, and $49 billion of non-interest bearing business deposits accounted for 15 per cent of domestic business deposits.
There were $75 billion of at-call retail deposits and $100 billion of at-call business deposits – 46 per cent of domestic retail deposits and 53 per cent of domestic business deposits.
There has been a shift to higher-cost term deposits but they still make up a relatively small share. The proportion of domestic retail deposits in term deposit accounts increased from 23 per cent to 25 per cent over the past 12 months, and the proportion of domestic business deposits in term deposits accounts grew from 26 per cent to 32 per cent.
Comyn said the lower cost of capital that results from its high level of deposit funding flows through to benefits such as a greater capacity to invest than its competitors.