Pace of change redefining bank, SME relationship

Australian banks need to acknowledge that SMEs are not one big, homogenous group and carefully chose servicing partners if they are to deepen their relationship with a sector increasingly prone to disruption.

This was the view of an expert panel at the RFi Group's Australian Business Banking Summit held in Sydney yesterday with Grant Johnston, commercial payment solutions at MasterCard, moderating a session on SMEs top financial needs and priorities.

The pace of change has put pressure on banks to review whether they simply want to finance SMEs or extend their servicing to act as business consultants – and whether they need an intermediary partner to do this.

According to Claire Scott, head of Everyday Banking at Westpac, the interests of banks and SMEs are not always well aligned and the former must explore ways of collaborating better to retain the sector’s trust.    

“In these changing times, I believe the fundamentals remain the same but we need to partner and we need to partner better. We’re not good at it and there are a whole bunch of reasons for that,” she said, adding that while every bank in the country rates its payroll capability to service small business, the conversation has moved on.

“No small business just wants to pay their staff. Every small business wants to manage their people and give them access to the best employee platforms that exist – to give them the same capabilities and insights as large organisations. The only way to do that, in my belief, is to partner.

“We now have the opportunity to work better, to collaborate better. In fact, that is the way the world is going: communities build communities and we are all one community.”

Passionate but blind

Brendan Green, general manager – working capital solutions at Octet Finance, a business loan disruptor, said the days of banks signing up SME clients to enormous and complex documents were over.

“As bankers, we need to put ourselves in the customer’s shoes and think about what is important to that business,” he said. “For example, if they (the SME owner) are looking to pass the business on to sons and daughters, then is it appropriate that their personal assets are there as security?

“Over time, how do we work with them so that those assets can be removed from the banks security and we’re able to pass that business on to the next generation, potentially on the basis of the security being in the business itself.”

Stephane Ibos, CEO of Maestrano, a cloud-based platform hosting “tens of thousands” of small businesses, said he was constantly amazed that SME business owners are “so deeply passionate about what they are doing” but also “so blind about how they are doing it”.

He added that this fundamental problem was compounded by bank relationship managers who had too many SME clients to know each one personally while offering too many financial products to know which was best for each individual’s need.

“When you talk to the relationship managers … they will say that they can’t possibly remember the 135 products that they have within the bank. They know between five and ten of them really, really well and those are the ones they always sell,” he said.

“So now you are telling them that, on top of that, they need to know by heart the 500 SME clients in their portfolio … that’s just impossible. What we are saying is: what if, through technology and data sharing, when the SME comes in, you could talk to them as if at the local pub.”


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