Banks 'need to improve customer service'

And the banks should be concerned, with 80 per cent of customers prepared to consider switching providers, a survey by information technology and communications solutions provider Fujitsu Consulting shows.

The survey of 26,000 retail banking customers found poor service was the biggest customer frustration at 31 per cent, followed by complex terms and conditions at 10 per cent.

Fujitsu Australia and New Zealand managing director Martin North said the findings debunked the common assumption that prices are the primary reason customers leave.

"Our research shows that, in reality, poor service is the number one 'toxic' issue driving customer churn in the financial services industry," Mr North said.

He said the financial services sector was "significantly" failing to improve customer service, instead focusing on growing their market share.

Mr North said banks needed to address the issue urgently, with customer turnover at an all time high.

He said an average of 25 per cent of customers a year were switching banks.

Of those respondents prepared to consider switching banks, 26 per cent said they would look for a better rate, while 23 per cent would switch to find better service.

About 19 per cent said they wanted better product, while 17 per cent would look for more loyalty rewards.

Secure online banking facilities also are an important factor for customers, according to a survey by research firm Taylor Nelson Sofres (TNS) and RaboPlus, the online banking arm of RaboBank Australia.

The survey of more than 1,000 retail banking customers found 76 per cent considered the safety of security systems when deciding which online bank account to choose.

One in ten respondents had fallen victim to online banking fraud, and 78 per cent want banks to upgrade online security beyond a username and password, the survey showed.

RaboPlus head of financial services Bryan Inch said online banking security in Australia was well behind security in Europe and the United States.

"As online banking is one of the fastest growing areas in Australia, there is an understandable groundswell amongst bank customers to find the best online security to protect themselves," Mr Inch said.