40,000 show interest in People's Bank

By KEVIN TAYLOR

More than 40,000 people have registered their interest in the People's Bank, says NZ Post chairman Ross Armstrong.

The expressions of interest came in response to pamphlets in postshops asking for feedback.

The new bank, being launched early next year by NZ Post, needs at least 100,000 customers after three years.

Mr Armstrong said he had seen little sign yet of reaction from other banks to the newcomer - a name for which will be announced soon.

Meanwhile, Consumer magazine has published a damning survey showing high fees and poor customer satisfaction with some banks.

A $100 cheque account was set up with seven banks and one savings institution. Four $10 automatic payments were established going out of the account each month, and four $10 deposits going in.

Fees left the BNZ and ANZ accounts in deficit by $10 and $8 respectively after a year.

Satisfaction was poor, especially with ANZ, and customers were considerably happier with the smaller New Zealand-owned institutions such as PSIS and TSB.

Consumer editor and Consumer's Institute acting chief executive Simon Wilson said the new bank would force others to lift their game by increasing services and acting as a brake on fees.

"What we are hoping is the analogy between Air New Zealand and Ansett may come to pass," he said. "Air NZ vastly increased the quality of its service when it got real domestic competition."

He had not seen any moves by existing banks to meet the threat of the new bank - or The Warehouse's recent offer of banking services with WestpacTrust.

"I think everyone's waiting to see," Mr Wilson said.

The director of banking studies at Massey University, David Tripe, was sceptical whether the 40,000 expressions of interest would translate into customers.

"Getting 40,000 requests for information does not necessarily tell you anything about what the final response rate is," he said.

He had seen no evidence that banks were responding to the new competitor, and he was not surprised by the Consumer magazine findings.

"As a general rule in most cases banks charge fees that are less than the cost of providing those transactions," he said. "So it would be very easy for the new bank to wind up having to charge more than the existing banks."

ANZ announced a customer charter on September 30, but denied it was a reaction to the People's Bank.

Spokesman Mark Thomas said ANZ had known for a couple of years it had low customer satisfaction.

"We started seriously focusing on this in November last year and the charter is one of a number of things we have done," he said.

"We are obviously mindful of the People's Bank, but we have had new competitors coming into financial services for years now."

WestpacTrust spokeswoman Jane Anderson said the new bank would be treated like any other new rival.

WestpacTrust did not have any particular plan to respond, but it did value each of its 1.3 million customers and wanted to retain them.

Accountancy firm KPMG said in its annual banking survey in May that the new bank could result in lower fees or sharpened interest rates by existing competitors.

"This will affect all banks operating in the retail sector, not just those losing customers to New Bank," it said.

If the new bank could achieve new levels of satisfaction without the "baggage" of an existing customer base, then the conversion rate of new clients could be considerable.

The new bank will initially offer only personal banking services.

nzherald.co.nz/peoplesbank