Public turn off People's Bank

By KEVIN TAYLOR

Support for the People's Bank has plummeted in an annual survey of banking satisfaction - at the same time as existing banks have lifted their game.

But Deputy Prime Minister and Alliance leader Jim Anderton says the figures are not a concern and actually show a surprising amount of support for a bank that does not yet exist.

Only 19 per cent of those surveyed in the annual University of Auckland Business School study said they would consider doing business with the new bank - down from 40 per cent last year.

And even worse for the new bank is that only a quarter of those saying they are considering switching ever actually do, the survey's authors point out.

The same survey showed satisfaction with existing New Zealand banks had risen sharply.

Overall residential customer satisfaction rose from 63 per cent last year to 69 per cent this year, business satisfaction from 59 to 71 per cent.

The look and branding of the yet-to-be-named People's Bank will be unveiled today in Wellington, and the survey is sure to come as a blow. The new bank will open in February or March.

The survey, by Mark Colgate and Bodo Lang from the business school, asked 1285 residential customers about their perceptions of banks and their opinion of the People's Bank.

Seventy-three per cent of residential customers said they would not consider switching to the new bank, compared with 41 per cent who in last year's survey ruled out switching.

And only 31 per cent of New Zealanders now agree with the concept of the People's Bank, while 54 per cent disagree.

Last year, 54 per cent agreed and 30 per cent disagreed.

Mr Anderton, one of the bank's biggest supporters, said the survey did not suggest the bank was a bad idea and it was no surprise that support had slipped during what he called a "lengthy period of fairly negative attack".

"It's far from terrifying; in fact it's reasonably satisfying for the bank's managers," he said.

"If 31 per cent support is as bad as it gets, and I suspect it may well be, then that's not too bad for a bank that doesn't exist yet."

He said today's unveiling plus publicity before next year's launch would give people the opportunity to make a more informed choice.

But Dr Colgate said the results showed the new bank might have to work harder than it first thought to convince New Zealanders to join.

The dramatic improvement in the satisfaction rating of the existing banks had probably affected the People's Bank results, Dr Colgate said. The new bank's novelty had worn off and enthusiasm had waned as more details had emerged.

There was also evidence Government involvement had put some people off - the Government factor being the least popular of the reasons people gave for why they might switch.

Dr Colgate said the survey was bad news for the new bank. The number of customers actually switching banks in New Zealand was only 4 to 5 per cent a year - despite many more saying they intended doing so.

"Our experience shows only about 25 per cent of customers who say they are going to switch actually do."

Mr Anderton said that if that figure held true, then he was "more than confident" the bank would reach its break-even point of 100,000 customers, or 5 per cent of banking customers, within three years.

He said he was also pleased with the name of the bank, which remains secret until today's launch.

nzherald.co.nz/peoplesbank