(30 March 2005 – Australia) Banks in Australia are struggling to deliver high quality Trade Finance services to SMEs and are consequently undermining their ability to carve out greater share of a market forecast to be worth more than A$155 million in 2005, according to East & Partners.East’s latest six monthly research into Australia’s Trade Finance markets
reveals that SMEs (companies turning over between A$5 and 20 million per annum)
are reporting deteriorating levels of service from their banks.
Customer satisfaction ratings have dropped in Knowledge of Customer’s Industry,
Value for Money, Professional Competence, Innovative Solutions, General Trade
Advice and e-Trade Solutions.
“Although uptake of Trade Finance services among SMEs is still relatively low
compared to corporate and commercial companies, there is a huge opportunity here
if providers can lift their service game,” East & Partners principal analyst
Paul Dowling said.
“We estimate the market for SME Trade Finance to be worth about 15 percent of
Australia’s total 2005 Trade Finance market. It’s a segment that is set to grow
at a faster rate than the market at large and one that offers deeper margins to
banks than those available in the middle or corporate markets,” he said.
Not surprisingly, poor customer satisfaction experience is being reflected both
in decreasing uptake of Trade Finance overall and in banks’ individual market
share of primary Trade Finance relationships with SMEs.
The latest report reveals that 15.5 percent of banks’ transaction banking
customers are engaging Trade Finance services from them compared with 15.6
percent six months earlier.
“The SME Trade Finance market is stagnating because banks for the most part
aren’t delivering the quality of service and advice that these businesses are
looking for,” Mr Dowling said.
“Given the global nature of Australia’s trading environment and the fact that
usage of Trade Finance is growing across nearly all industry sectors, there
would appear to be a clear market opportunity here for the domestic commercial
banks or other service providers to engage with small to medium sized businesses
in trade,” he said.
“Although most banks have refocussed on small to medium businesses over the past
12 months, and indeed on Trade Finance, somehow there’s a disconnect between the
two and SMEs are less than impressed with what banks have been delivering,” Mr
Dowling said.
“As a result, the number of SMEs saying they will ‘very likely’ switch their
Trade Finance banks over the next 12 months is edging towards 20 percent.
Historically, almost half of this number will in fact churn their banks, so
there are customers out there to be won by service providers with a compelling
proposition,” he said.
Commonwealth Bank, Westpac and ANZ have all shed market share over the past six
months, while National Australia Bank, St George, BankWest and Bank of
Queensland are the only banks to have moved in a positive direction.
All the international banks have lost market share in the SME Trade Finance
segment.
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For more information please contact:
Paul Bartholomew
Senior Consultant
East & Partners
Tel: +61-2-9004 7848
Mob: +61-410 400 156
paul.b@eastandpartners.com