A banking war has erupted as banks scramble to win over disaffected National Bank customers after ANZ National Bank announced yesterday that it would drop the National Bank brand in favour of ANZ over the next two years.
Rival banks have responded with large advertisements in newspapers today encouraging customers to switch to them.
Experts say ANZ has entered into an "incredibly risky time" as it moves higher value National Bank customers across to the less popular ANZ brand.
Massey University director of banking studies David Tripe said the volume of mortgage lending on floating interest rates would make easier for National Bank customers to leave.
Even those on fixed interest rates might not face the steep financial penalties for breaking their terms because interest rates had been relatively stable, Tripe said.
Rival bank would be hoping to win National Bank customers without needing to "prune their margins".
"I'm not sure how much of a hurry people will be in to shift. And of course when people are shifting they are going to look very closely at price."
It would be a matter of how banks responded to those potential price pressures, Tripe said.
National Bank has slightly higher value customers, but it was questionable whether other banks would be prepared to pay a premium to win their business.
Bank of New Zealand stood out as the other big bank with a high socioeconomic brand.
"But the BNZ brand has unfortunately been sabotaged for being a brand to the elderly", though it had been winning some younger customers.
"But they have been very badly positioned in that regard."
BNZ has significantly improved its customer satisfaction ratings with over the last two years from fourth place among the six biggest bank to overtaking ASB for second and closing in on traditional pole-sitter Kiwibank according to Roy Morgan Research.
Banks had also been putting more money aside recently placing them in a better position to compete for good quality customers and grow their business, Tripe said.
All the banks would significantly increase their advertising, with several taking out large advertisements in newspapers immediately after ANZ National's brand merger was announced on Wednesday, encouraging customers to switch banks to them.
"It will be good business for newspapers," Tripe said.
- © Fairfax NZ News