(27 August 2020 – Australia) Commonwealth Bank is expressly targeting new business lending market share through leading digital solutions and old fashioned relationship banking.
CommBank confirmed it has amassed 50 percent market share for loans approved under the Federal government’s A$40 billion SME loan guarantee scheme underwriting half of the losses of eligible loans. Loan volumes rose A$5 billion in H1 2020 compared to A$2 billion in H2 2019 noting a high number of these loans were originated through ‘BizExpress’, CBA’s digital SME lending channel. Small business customers are provided with real-time credit decisioning with up to A$50,000 in funds credited directly to their account within 20 minutes.
The digital transformation of CBA’s BizExpress platform has been fast-tracked to help small businesses get immediate access to funding to support and grow their operations as the country looks to recover from the worst effects of the coronavirus pandemic. BizExpress had previously only been used internally however with BizExpress Online customers can now submit applications directly themselves.
Further development is slated to increase maximum loan amounts progressively to A$100,000 and beyond. According to CBA, BizExpress has also become the preferred application and settlement process for about 8,000 SMEs who have secured approximately $700 million via CBA through the Government’s Coronavirus SME Guaranteed Scheme.
ANZ has also announced an initiatives to speed up lending approval times for small businesses, launching ANZ Online Business Lending, a new dedicated online lending platform providing small businesses with conditional approval for up to A$200,000 in unsecured lending within 20 minutes alongside its new eSignature tool.
Small business banking is under intense scrutiny amid growing competition and fears of hefty coronavirus-linked losses. The latest official ABS data this week revealed that over a third of businesses are expecting to struggle to meet financial commitments over the next three months, with small businesses almost twice as likely as large businesses to be in severe financial strain. Earlier ABS research painted a grim picture for the long road to economic recovery. According to Allianz Australia research, 84 percent of Australian small businesses have faced financial, operational and emotional challenges as a result of the pandemic. Over 1.1 million small businesses believe without support, their cash reserves will only sustain them until the end of Q4 2020 and almost two-thirds doubt the long-term viability of their business.
CBA is preparing for ‘tough conversations’ with small business owners given 15 percent of loans are on deferral schedules. CommBank is also keen to change the real-life conversations CBA is having with business banking customers in terms of substance, and how those discussions are held by developing tools and products to help the groups business bankers and relationship managers lend against other collateral that better reflects the cycle of a business, such as inventory and receivables. CBA Business Banking Head, Michael Vacy-Lyle, quoted that he has been “bloody amazed” at the focus on securing business loans with property in the Australian market.
The Bank is also allocating 120 business bankers back into branches by the end of Q4 2020, arguing that too many bankers have been taken out of the field and put into call centres. When Vacy-Lyle landed in Australia he says he was bombarded with comments about SME-focused bank Judo, but when he looked at its strategy, it was old-fashioned relationship banking.
“We wanted to test the rails and see how it worked. COVID has been a wonderful opportunity to accelerate stuff that was getting jammed. People just got stuff done. CBA’s digital capability is one of our key strengths in business banking, alongside our strong share of SMEs who have their main transactional account with the bank and robust balance sheet. Those are probably the three most powerful things a bank can have to try and win market share” stated CBA Group Executive Business Banking, Mike Vacy-Lyle.
“A receivables book that has aged less than 60 days is almost as good as cash. That’s where they are going, and they are right. The difference is we’ve got scale. Your best loans can be written in tough times. If you can be a little bit counter-cyclical, you can actually pick up good business” Mr Vacy-Lyle said.
“Our latest investment in the new digital version makes it even easier and quicker for our customers to get the financial support they need. BizExpress Online not only provides a lending decision in record time, but also enables a customer to have the funds in their account in near real-time, in as little as 20 minutes. Small businesses need quick access to cash flow to keep them going through these tougher times and BizExpress Online aims to provide them with this. It means eligible customers can apply directly by logging onto Netbank or the CommBank app. No other Australian bank offers this complete fully automated service with near real time funding” Mr Vacy-Lyle added.