(17 May 2006 – Australia) Selling Trade Finance services to small business customers is still a work in progress for Australian banks with SMEs indicating they are unhappy with the service they are currently receiving, East & Partners’ latest report shows.East’s latest six monthly Trade Finance Report reveals that customer
satisfaction levels have deteriorated across important factors such as Speed of
Query Responses, Value for Money, Bills for Collection, Risk Advice &
Management, Knowledge of Customer’s Industry, and Customer Service in this
critical market segment.
As a result, banks are struggling to grow the share of SMEs engaging Trade
products and services with many businesses using simple lending products such as
overdrafts and loans to support their trading activities.
The Big Four banks are experiencing slow attrition in Trade finance engagement
among their customer bases. The strongest performers are international banks,
HSBC, Citigroup, and JPMorgan, which have large Trade footprints relative to
their share of transaction banking customers.
Niche providers such as Arab Bank and BankWest are carving out sustainable beach
heads and the regional banks are holding their own, often using “white
labelling” solutions from providers such as ABN Amro.
“Australian banks are particularly strong in Cash and Payments but less so in
Trade compared with international banks in the region, although there has been
one big exception historically here – ANZ,” East & Partners principal analyst
Paul Dowling said.
“But domestic providers are aggressively re-engineering their Trade offerings
and moving towards deploying e-Trade platforms whilst at the same time working
to maintain their existing Trade service – all part of a Big Four fight back
against new forms of competition in the market.
“The deterioration in customer satisfaction could be attributed to providers
losing sight of the customer while they try to improve their Trade
propositions,” Mr Dowling said.
“International banks have already gone down this path, but of course, they
currently have significantly fewer customers relative to the major domestic
banks.
“Penetration of Trade products among SMEs is low currently but this means
there’s plenty of upside for the provider who can connect with these customers,”
Mr Dowling said.
“It’s a chicken and egg situation as SMEs traditionally have been ushered
towards overdrafts and term loans by their bankers, often because they’re unsure
of the customer’s credit quality and trading patterns. Trade Finance has become
a crucial part of SME’s demand for broader liquidity financing answers,” he
said.
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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