Superbank learns from its mistakes

The head of the country's only supermarket bank admits to making some mistakes since opening just over a year ago - but he says the bank is on track to enter the home lending market shortly.

Superbank sprouted from a joint venture between supermarket giant Foodstuffs and Australian bank St George in February last year.

It began offering a high-interest savings account and later a transactional account.

The bank kept a low profile compared to others last year and reported an annual loss for the year to September 30 of $12.6 million.

Its chief operating officer, James Munro, said he was happy with progress a year after opening.

The result had not been a surprise because it contained all start-up costs, including legal fees, costs for the formation of the joint venture, bank registration, building rents, recruitment of staff, and the building of systems from the ground up.

But while not surprised by the result, Munro said he had been frustrated by continual public comparisons between Superbank and state-owned Kiwibank.

"We are doing very different things. It's like comparing Perrier and Coke because they're both drinks. They're not the same."

Munro said Superbank had no intention of opening a network of branches as Kiwibank had done. It aimed to be a niche player offering products that were slightly different from those already on offer.

Since it opened, important lessons had been learned and the bank had evolved, he said.

In its first month of operation Superbank signed about 1000 customers a week to its only offer, the high-interest SuperSaver account. Now it was signing between 200 and 250.

But Munro said the customer mix had changed for the better.

The account was miscommunicated to the market initially, he said. It attracted aspirational savers, and many who signed up did not have a lot of money.

Since the account had been remarketed to attack the term-deposit market, more high-value customers had been signed up and Munro was happier.

"Many of those original people, more than half, have become good customers and we're happy to have them. But they weren't, in the first instance, the people that SuperSaver was targeted at."

The average balance of accounts was now $24,000, he said. The bank had just gone past the milestone of $150 million in deposits and had targeted $250 million by September - just 0.5 per cent of the term-deposit market.

"That's a nice start for us. We think we're a long way from plateauing in that market," Munro said.

Other regrets from the first year included an application process which turned some potential customers off, an internet account opening system which caused problems, and too much reliance on the supermarkets without giving them enough tools to deliver good customer service.

"We cleaned all of that up in the first four or five months of operation. 20/20 hindsight is a wonderful thing. We learned some really valuable lessons and we're going uphill like a train now."

Munro said he regretted losing a few customers along the way, but did not regret the lessons. Customer satisfaction surveys were now returning good results and growth was steady.

Superbank will enter the home- lending market using mobile managers in the middle of this year.

By the end of the year it will also have its own brand ATMs in supermarkets.