Australians are wasting an estimated $11.6 billion a year by not acting on their intentions to switch banking, insurance, grocery and utilities providers, according to a new consumer behaviour study.
The national research found that more than 50% of Australians had seriously considered switching their providers for those services – but less than 25% acted on those intentions.
Savvy switchers who shopped around to find the best rates and services saved more than $2.5 billion per year. If the whole nation switched, Australians could save a staggering $11.6 billion per year.
The report, conducted by the Queensland University of Technology (QUT) on behalf of Heritage Bank, examined the switching habits of Australians across a variety of bank and service providers including home loans, credit cards, home and contents insurance, energy and grocery suppliers, and mobile phone and internet providers.
The report revealed almost a third of Australians think switching is too much effort, making it the leading barrier to finding the best deal.
Around 1 in 6 of the population don’t switch because they think it will cost too much. That is contrary to the report, which found people had made significant savings by switching. A third of those who switched home insurance providers saved more than $300; while switching grocery stores saved nearly 15% of people more than $1,000 per year.
Across all sectors, Australians are most likely to switch their energy provider (29%) and least likely to switch their credit card (17%) and home loan (18%).
Customers are far more likely to switch when potential savings are clear. Nearly 83% of Australians said they would switch their home loan if they could save around $3,000 per year and around 70% would move mobile phone providers to save at least $150 per year.
Customer service is also essential to customer satisfaction, with 1 in 5 moving banks due to unhelpful staff at their old provider.
Commenting on switching habits of Australians, Dr Juliana Silva-Goncalves from Queensland University of Technology, says: “It's interesting to see apathy as the key barrier to switching across such a wide range of industries. This belief it's too hard to switch and too costly, is stopping households from saving thousands of dollars. We expect this trend to change and the amount of people switching to significantly rise over the next year with the expected economic downturn motivating people to shop around and become more savvy.
"At the same time, we recommend businesses make all information readily available and highlight where clear savings can be made."
Where Australians live and their age group also impacts switching habits and savings. People living in metropolitan areas are more likely to switch their home loan, credit card, home insurance or energy supplier. People in rural areas are more likely to switch grocery suppliers and on average save more if they do choose to switch their home loan. Younger generations are more likely to switch, for lower amounts than older generations.
Heritage Bank Executive Jane Calder said: “We conducted the study with QUT to better understand what motivates Australians to switch. It is shocking to discover a huge proportion of the nation believe that switching will actually cost them money when in reality, our report shows people who shop around for the best rates and deals have already saved a massive $2.5 billion per year.
“We are always looking to improve our products and offer customers the best possible deal. As Australia’s largest customer-owned bank, we don’t have shareholders seeking dividends, so our home loan and credit card rates are some of the lowest in the country. For example, by making the move to Heritage, an average Australian home owner with a big four bank mortgage could save around $3,000 per year – which is a hugely significant amount of money. We have also made the switching process as easy as possible with a simple online application form.”
Download the full report.