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The going gets tougher in Australia's Corporate Transaction Banking markets

The going gets tougher in Australia’s Corporate Transaction Banking markets

(Australia) - A just released report from East & Partners' Corporate Transaction Banking Markets Analysis service has revealed continuing escalation in the competitiveness of the marketplace and corporates lifting the goal posts even higher for service providers.

On 21 of the 27 performance measures the research monitors, CFO expectations regarding the level of importance of these factors to their Transaction Banking relationships have increased even further over the past 6 months. Market-wide, these expectations in corporate Australia have climbed by some 4.4%, lifting the goal posts for banks and making it increasingly challenging to bring differentiation and value to the customer relationship. The 5 factors displaying the fastest lift in importance to the CFO since the last release in November, 2001 have been:

  • Usefulness of the Bank's Website

  • Value for Money

  • Quality of Contact with Bank's Senior Management

  • Bank's Account Management Practices

  • Quality of Service

The 5 most important issues to corporates in their Transaction Banking relationships and by inference, the key bank performance factors sought from their bankers, are:

1st Quality of Transaction Execution
(Also 1st in November 2001)
2nd = Professional Competence, Understanding of Customer's Business
3rd Quality of Service
(Understanding Customer's Business in November 2001)
4th Your Account Officer
(Overall Quality of Service Delivery in November 2001)
5th Response Times on Queries
(Also 5th in November 2001)

By contrast the 5 least important factors (of the 27 monitored in this program) to corporates in their Transaction Banking relationships remain exactly the same and in the same ranking as 6 months ago:

27th Social Interaction
26th Usefulness of Bank's Website
25th Reputation / Name of Bank
24th Credit Rating of Bank
23rd Frequency of Contact with Bank's Senior Management

This continues to be a somewhat damning rating of the real perceived value to corporate customers of much bank behaviour in "relationship" development and banking. The very tools and techniques that continue to be used by banks to grow and extend their existing corporate relationships (socialising, media advertising, website marketing) at least in the Transaction Banking space continue to not be highly regarded, irrespective of how well or poorly they are in fact being executed.

Transaction Bank Performance in the Australian Markets

Transaction Bankers to corporate Australia are continuing to deliver relatively high levels of satisfaction. Again, only 1 of the 27 factors monitored performed at less than "average" (2.5 on the reversed 1-5 performance rating scale used) displayed in Table 1 following - Social Interaction.

In the majority of service factors benchmarked in this research, overall bank performance has improved over the past 6 months. Not only are the market's goal posts lifting as CFOs' service expectations rise but banks themselves are making the competitive landscape tougher to perform in through superior service delivery.

Substantial variations in individual bank performance continue to be evident in the ratings being accorded to each from their customer bases. In a marketplace contracting as the number of high end "available" customers reduces, retention and deepening of a transaction bank's existing base is critical. Individual bank performance also varies significantly based on whether the relationship with the corporate is a Primary or Secondary one. A significant variance is also visible in overall industry performance based on primary versus secondary relationship positioning. Although satisfaction levels are generally below those resulting from primary transaction banking relationships, secondary bank suppliers have registered faster improvement over the past 6 months, lifting their performance levels market-wide by 7.1%.

How can Banks Lift Their Performance to Corporates?

The top 3 initiatives corporates have reported as "making a difference" in improving their quality-of-service experience in Transaction Banking remain:

  (% of all initiatives)
   
Better Understanding of Client's Needs 23.4
Local Branch Help Desk Support 16.6
Enhance Electronic Delivery Systems 20.9

Notably, given the strong shifts to back office centralisation in Transaction Banking generally, Local Branch Help Desk Support remains as a key area of performance improvement for banks in the eyes of CFOs.

For further details on this demand research service and its unique insights to the market's behaviour email paul.d@eastandpartners.com

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