Lower fees and better banking infrastructures are two key reasons for consumers to switch their transaction accounts, according to the latest analysis by Datamonitor.

The latest report* on Australian retail deposits reveals that fees on transaction account are still the number one factor for consumers to switch. "43% of consumers who have switched their transaction account in the last 12 months have indicated that better fees by competitors are one of their reasons to switch," says Harry Senlitonga, Datamonitor's senior analyst and author of the report.

While fees are important, consumers are also looking for convenient everyday banking from their deposit providers. Indeed, since the ATM Reform in 2009, ATM network becomes a strong point of differentiation for deposit providers to provide Australian consumers with more chances to avoid unnecessary ATM direct charging fees.

"26% of Australian switched to providers with better banking infrastructures in the form of better branch and ATM locations facilities," adds Senlitonga, based in Sydney. Analysis on consumers who have switched to the four major banks shows interesting outcomes, reflecting different driving factors for each of them.

"NAB's leadership on banking fees, started with removal of exception fees, followed by other fees initiatives on transaction account since mid 2009, have attracted consumers seeking for a lower fee for their transaction account. 58% of consumers indicated better fees as one of their reasons to switch their transaction account to NAB."

"Whereas, 50% of consumers, who switched to Commonwealth Bank, are more looking for access to a better ATM network."

Persuading consumers to switch their transaction account and gain new customers is one side of the business. Great acquisition strategies need to be supported with excellent retention strategies.

"The key challenge for financial institutions targeting deposit consumers, especially young generation is to overcome their low level of loyalty.

The report outlines that Gen Ys** are up to five times more likely to switch their transaction account than the older generations. This indicates there is a strong need for deposit providers to offer incentive scheme to increase levels of customer loyalty within the institution," concludes Senlitonga.