24/05/2005 - 22:00

Small banks grab SME market

24/05/2005 - 22:00

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Nearly one quarter of all small businesses are planning to change banks in the next six months, a national survey has found.

Small banks grab SME market

Nearly one quarter of all small businesses are planning to change banks in the next six months, a national survey has found.

East & Partners’ SME Banking Markets report also found the big four banks – ANZ, Commonwealth, National and Westpac – are continuing to lose market share to smaller competitors in every state.

In Western Australia, the big four banks’ market share has slipped from 73 per cent to 68 per cent over the past two years, with the balance taken by the likes of BankWest, St George, HSBC, Citigroup and Bendigo.

This makes WA the weakest market for the big four banks.

The survey, focused on companies with turnover between $5 million and $20 million, found a growing demand for products like term loans, overdrafts and leases.

However, it also found that issues like loyalty and knowledge of customers’ needs were seen as increasingly important.

“The SME market is the most dynamic banking market in Australia currently with a significant amount of activity taking place,” said East & Partners’ principal analyst Paul Dowling.

He said the big four banks have “re-engineered” their offerings to SMEs but “it’ll take them a while longer to get to the same service level as their regional counterparts”.

The survey concluded that Sydney-based St George, which has a relatively small but growing presence in WA, “remains the benchmark relationship banker and satisfaction is being turned into market share”.

“St George isn’t the cheapest bank in the marketplace but it illustrates that SMEs consider good service and a harmonious relationship with their bank a price worth paying,” said Mr Dowling.

It topped the East & Partners’ survey across a range of quality measures, such as understanding SME issues, relationship management, proactivity, innovation and customised banking solutions.

St George state manager Martin Barrett estimates his bank has about five per cent of the business market in WA, led by its property finance division, and he is looking to double its market share over the next two years.

It is currently recruiting extra staff, will open its first suburban office in Osborne Park later this year is finalising plans to open in Kewdale and Fremantle in 2006.

BankWest is one of the big players in WA’s small business market but is considered a new player on the east coast.

Its push into the east coast market was illustrated by the recent recruitment of a Melbourne-based banker, Paul Clark, to fill the new position of chief executive business banking.

Mr Dowling said: “BankWest is rated highly for value for money but we saw the bank’s relationship management satisfaction rating deteriorate slightly in this latest report”.

“The quest for new customers has to be combined with looking after your existing ones; it’s a case of getting the balance right.”

The survey found that 11 per cent of SMEs will “definitely” change banks in the next six months, another 13 per cent say it is “highly probable” they will change banks and nearly 25 per cent say it is “possible” they will change banks.

East & Partners found that 40 per cent of SMEs would consider following their relationship manager to another bank, which was somewhat surprising given their views on service quality.

More than half of all SMEs had never had a visit from their manager (39 per cent) or could not recall a visit (14 per cent) and 60 per cent of SMEs were not happy with the service they have been receiving from their manager.

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