Select a page

Banking News

Executive Interview - George Frazis - Executive General Manager, Business and Private Banking, Natio

Executive Interview - George Frazis - Executive General Manager, Business and Private Banking, Natio

(13 April 2005 – Australia) National Australia Bank would be the first to admit that it has undergone a torrid period over the past 12 months or so. But despite this the bank has maintained its historical position as the leading banker to Australia’s small business sector. According to East & Partners’ Micro Business Banking Report, which looks at the banking experiences of companies turning over between A$1 to 5 million per annum, the National is the number one bank both in share of primary transaction banking relationships and lending to these businesses. The bank has 26.0 percent of primary transaction banking relationships with Micro Businesses and 30.8 percent of the A$ term lending market. In the larger SME segment (A$5 to 20 million), the National’s share of primary transaction banking relationships has remained stable over the past six to nine months and there are signs the bank is starting to regain traction in the segment, according to East’s SME Banking research program.

With key appointments made in the National’s Business and Private Banking arm, a number of new initiatives and a more flexible credit strategy, the bank is approaching the small, medium and large business segments with renewed confidence. To illustrate this, the bank recently announced its lending to Australian businesses would exceed A$10 billion over the next 12 months.

East & Partners senior consultant Paul Bartholomew spoke to the National’s executive general manager of Business and Private Banking, George Frazis about the bank’s recent experience in the business banking markets and its plans for growing the division.

This interview was originally published in the JPMorgan and East & Partners’ Australian Corporate, Commercial and SME Banking Survey, Volume 7: March 2005.

How important is business banking to the National’s overall business?

Business banking is fundamental to the bank’s business. The National was brought up through the business bank and it’s always been a core part of the bank’s focus. Business banking contributes a significant portion of the National’s earnings. Last year we were not part of the market growth but our customer franchise held up over this period. We have a great franchise, but our experience last year highlighted that there were a number of areas for us to improve our client service, such as through relationship management, putting business managers back into the frontline, introducing innovative products and more efficient processes, and developing our people.

What was your impression of the business when you joined the National?

Even from the outside you know the National has a great business franchise and when I joined I noticed a lot of our relationship managers doing great work to service our customers. However, I also found there were a number of areas where the systems and processes sitting behind our bankers were not helping them serve their customers. An example of this is our credit processes. Over time our credit application process had become overly cumbersome and our relationship managers’ capacity to make credit decisions had been eroded by layers and layers of policy. Fortunately we have been able to remove some of these impediments relatively quickly, and as a result, we’ve seen our market share stabilise in our business banking segment.

What were your corporate and business customers telling you about the National?

Our customers were telling us they wanted to have a great experience when they bank with us. They want a hassle free, timely service, with an appropriate point of contact who knows them, who consistently delivers, and who provides a service flexible enough to meet their needs. But as I mentioned before, while our customers were full of praise for our relationship managers, they found our processes were too rigid and too slow. Our credit risk appetite was also far too tight and this has since been addressed.

To what extent have things been improved since your arrival?

We are making changes on a number of levels. Firstly, there were some levers we could pull immediately. This involved increasing delegated lending authorities for our bankers and reducing the layers of policy exceptions, which were stopping them from using their authority. It also involved streamlining our credit processes so we can turn around decisions faster. We can now provide approval for business loans of up to $750,000 in just 15 minutes.

Secondly, we’ve realigned our distribution to bring our Corporate Banking, Business Banking and Private Banking businesses together under one area for the first time. This recognises that many of our business customers want their business and personal needs met by the National in a seamless way. It also recognises the close links between our corporate banking business and our mid corporate area. The third thing we’ve done is to appoint state heads for Business Banking. Coupled with a decision to decentralise our credit resources back into each State, these actions have provided greater decision making authority closer to our customers. The reaction so far from customers to this new model has been extremely positive. Finally, we have a number of new product offers in the pipeline, which we’ll bring to market over the course of the year.

At the Bank’s full year result, Chief Executive John Stewart said the National’s business banking business had been too centralised and bureaucratic. How do you go about changing this and to what extent has this been achieved?

I think John’s comments were broad-based and applied to a number of areas across the group. I’ve already highlighted some of the issues we faced in business banking and the actions we have taken to address them. We are also looking at how we can streamline processes and improve productivity. When we talk about efficiency gains people often think that improving the customer experience and improving efficiency can’t be done at the same time. The reality is that in most areas they go hand in hand. For example, our end to end lending process has been reviewed, resulting in significantly less paperwork and only requiring client information one time. Improving the number of manual hand offs and the complexity of the credit decision process not only reduces costs by improving efficiency, but also improves the customer experience by reducing turnaround times and reducing errors.

How much of an impact did the currency trading saga have on the National’s Corporate and Business Banking operations?

The currency saga had minimal impact on our Business Banking segment, but there was obviously some impact associated with our Corporate segment. However, most of the issues which lead to business banking market share decline last year were as a result of decisions we had taken to tighten our credit risk appetite and cut back on front line bankers. As I have said, we were able to take some quick decisions to help our bankers, which has allowed us to stabilise our business market share in the first quarter of this year.

At the corporate end, our customer franchise is holding up, but the closure of our currency options desk meant we couldn’t offer selective products to our customers. As the Corporate business was part of our Institutional Bank at the time there was more distraction from dealing with the fallout of the FX losses there than there was in the Business or Retail bank. From a Corporate lead table perspective, we are in the Top 4 for most corporate products, but our objective is to be number one or two in all of these products.

To what extent has the Bank had to change its pricing to protect its customer base?

Our aim is to be competitive on price but to also maintain focus on service and client value-add. The National is a premium position bank which uses integrated financial services, relationship management, innovative products and services, and integrated business and personal solutions as its primary competitive lever.

What kind of corporate and business bank do you plan on the National becoming?

We want to be the leading Australian Bank in Corporate, Business, Agribusiness, Private and Premium Banking. This will mean delivering superior client service through our relationship management model, offering innovative products that create client value and having the best skilled people with extensive industry expertise. Doing all this will ensure we’re able to deliver top quartile shareholder value.

What are the strengths of the Bank’s business banking operation?

We were the first bank in Australia to set up specialised businesses with dedicated products and services tailored to specific industry segments. Our Agribusiness segment is a good example of how we recognised the need for specialist products and sales and credit skills, with the result being that we’re the clear market leader in the segment. We’ll continue this strategic decision, developing deep industry expertise that creates client value. We’ve got the most extensive network and footprint in regional Australia and the decentralised credit function means we can be closer to the customer and provide better service.

Have you identified any particular market segments (Corporate, SME etc) as an area of focus for the bank?

Given our leadership position in Business Banking, all segments are important. From a geographic perspective we have one of the strongest distribution networks and footprint. The core of our business in Business Banking is SMEs and Micro Businesses and we’ll continue to do well in this market. We’re adding senior management in New South Wales, Queensland and Western Australia and we’re recognising that there are other growth corridors where we can strengthen our presence.

What are the challenges involved in maintaining momentum with so many new key appointees?

The Business and Private Banking Australia Leadership Team is primarily made up of existing leaders who’ve been confirmed in their role. There has been some selective external staff recruited into leadership roles. We’re definitely encouraged by the way our new team has integrated and everyone’s working together to push towards our goals. While all this has been taking place, we’ve maintained a heavy focus on our clients, which has allowed us to stabilise our market share whilst undertaking significant process re-engineering to improve the customer experience.
East & Partners's avatar

Comment on this article

 

Your comments will not be published. Required fields are marked *

 

Please enter the word you see in the image below:


Subscribe

Subscribe to our mailing list

Sign up now to keep up-to-date with the latest
market news and insights in B2B banking.

* indicates required

For more information please read our Terms and Conditions and Privacy Statements.