Big banks dominate but business plays the field

THE business banking market in WA is dominated by five institutions – Perth-based BankWest plus the four major national banks.

These banks are the main financial institution for 99 per cent of WA businesses, according to a Yellow Pages Small Business Index Survey.

Within this group, BankWest and National Australia Bank are generally considered the market leaders.

Indeed, BankWest claims to have moved to number one with a 26 per cent share of all business lending.

While the big banks act as the main financial institution, there is a growing trend for small businesses to use more than one financier.

In 1993, only 17 per cent of small businesses used more than one bank, according to a KPMG Consulting report, Small Business Banking in Australia. By 2000, this proportion had increased to 28 per cent, and 8 per cent were using three banks.

Other lenders in the WA market include: regional banks such as St George and Suncorp Metway; specialist lenders such as GE; Home Building Society; and various credit unions.

While there is no shortage of competitors, the reality is that few small businesses switch. Only 16 per cent of SMEs surveyed by Yellow Pages had changed financial institutions in the past two years.

CPA Australia’s latest Small Business Survey reached a similar conclusion.

“Smaller businesses are reportedly frustrated by the ‘take it or leave it’ attitude of their bank but find switching banks to be too expensive and time consuming,” the report says.

The degree of frustration was borne out by the finding that 33 per cent of small businesses were not happy with their banking relationship.

Businesses that are more likely to have changed their financial institution were those seeking significant growth and the larger SMEs.

Among small businesses changing financial institution, 61 per cent changed to one of the major banks while 39 per cent moved to a non-bank financier.

The non-banks were used for a broad range of services including cheque accounts, cash management accounts and overdrafts.

The main reasons for switching were ‘better service’ and ‘less/lower fees’.

BankWest is hoping to take advantage of the disenchantment by positioning itself as different from the big national banks.

BankWest Business Express director Gary Johnson said banks as a group had focused too much on efficiency and too little on service.

He is aiming to revive the close and trusting relationship that many business people believe they once had with their bank manager.

That does not mean BankWest will be put-ting SME managers back in the local branches. They will continue to work from a central call centre.

But Mr Johnson believes phone-based services are not inherently a problem. He said SMEs were happy to deal with their manager over the phone, if the service was run properly.

This meant giving customers a direct line to a designated manager who worked local business hours and knew the customer and their industry.

Mr Johnson said BankWest was structuring its credit processes to suit different industries, in contrast to what he called the “robotic” credit-scoring model.

These initiatives seem to be paying off for BankWest, which has achieved 30 per cent growth in business lending in WA this year, according to Mr Johnson.


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3rd↑Commonwealth Bank79
4th↓ANZ Banking Group72
5th-National Australia Bank68
25 banks & non-bank lenders ranked by number of branches in WA

Business banking employees

3rd-Commonwealth Bank280
4th-National Australia Bank175
5th↑ANZ Banking Group67
21 business bankers ranked by number of business banking staff (WA)

Number of Employees

Banks & Non-Bank Lenders

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