Consumers around the world have been on a drive to accumulate money in their bank accounts since the global pandemic began and Australia’s consumers have been no different.
Australian's have had a greater appetite to save during the crisis with household savings remaining at a historically high level at the end of 2020, according to new research from RFi Group.
In a new survey, RFi researchers noted how in Australia, as elsewhere, lockdowns and travel restrictions dampened spending. And even despite an economic recovery, the perception of a need to save ‘just in case’ is impacting savings sentiment, with a financial buffer or safety net the primary savings goal for savings account holders. “There is likely to be sustained demand for savings products throughout 2021 following an increase in savings account uptake intent throughout 2020,” they concluded.
A solid 32 per cent of respondents plan to increase the amount they deposit in the next 6 months. Breaking it down into segments, about 64 per cent of under 25-year-olds planned to stash more money in their bank account whereas that number dropped to 45 per cent for those aged between 25 and 34 years. The numbers fell dramatically after that. Just 29 per cent of those aged between 45 and 54 aimed to keep money in their savings account and only 11 per cent for those over 55 years.
“Hence now is a good time for banks to be re-thinking at-call deposit propositions,” the RFi Group argued in the report.
The low-rate environment seems to be affecting peoples’ perceptions of rate, with the number of savers who believe that the rate they receive is lower than others in the market increasing significantly over the last six months. “Sensitivity towards rates also remains heightened despite a fall in the number of people who believe they know what their rate is and a drop in people those who are regularly checking their rate.”
The research revealed that UBank and ING customers are more likely to believe their rate is higher than others in the market. Perception of high rates at Westpac is driven by their 18 to 29-year-old savings account holders, who are currently being offered rates of 3 per cent.
Upping the rewards
Bonus interest rates are driving savings account provider choice for one in four savers across the total market; this is highest among ING, other online bank and neo bank customers, according to the report.
Still, banks need to think beyond rate to differentiating deposit propositions, especially for young customers.
“Supporting ‘good’ savings behaviour could be a way for banks to add value for savers,” the report’s authors concluded. “Savings account providers should consider the addition of features that support savings, such as round up, or offer savers incentives to reach savings goals, as these are the features savers would find most valuable.”
Financial management tools are also considered to be features that savers would find most useful in improving their savings and spending behaviour Currently, St George and Bankwest are performing the best in terms of helping their savers manage their money, according to the report.
Even so, the research showed that customers under the age of 35 are especially likely to find these features useful.
Almost 70 per cent of the 18 to 24 years olds were keen to be rewarded for meeting their goals such as discounts/cashbacks on purchases at major retailers, frequent flyer points, gift cards, etc. Around 50 per cent of this age group liked the financial management tools.