Big 4 share of SME market under threat
East’s latest SME Banking Markets report, which covers all core product
banking experiences of companies turning over A$5 to 20 million, shows the
collective share of the Big Four has dropped to 67.5 percent of primary
transaction banking SME relationships from 68.2 percent six months earlier.
The report shows that St George Bank, BankWest and Bank of Queensland have all
gained customers over the past six months while Westpac and ANZ’s share has
slipped slightly.
Of the other regionals, Bendigo Bank’s share of this segment has remained static
while Suncorp has shed customers since the previous report.
The report also reveals that 23 percent of SMEs will "definitely" or "probably"
change primary service provider within the next six months – compared with 21
percent six months earlier. A further 20 percent say it’s "possible" they will
look to engage another primary bank.
"The SME market segment is extremely dynamic right now with some 43 percent of
small businesses saying they are seriously considering or at least contemplating
moving to another bank," East & Partners principal analyst Paul Dowling said.
"Our research shows that about six to eight percent of these small businesses
will churn their banks over the next six months, or an annualised churn rate of
twelve to sixteen percent" he said.
"The eastern seaboard is particularly dynamic. You have regionals such as Bank
of Queensland, BankWest and Suncorp all heading interstate in search of small
business customers. St George is increasing its focus beyond New South Wales,
and the majors are all putting business bankers back into the branches.
"The major banks have been restructuring internally to better target these small
businesses and looking to overcome cynicism from a segment of the market that
has felt forgotten by them for a long time," Mr Dowling said.
"Historically, SMEs have not been big buyers of service and product but they’re
gradually becoming more sophisticated and they’re certainly seeing a lot more of
banks – both their incumbent and other banks pitching for business – than ever
before.
"There is a huge opportunity for banks that are able to engage with these small
businesses and stay with them while they grow, providing advisory services as
well as products," Mr Dowling said.
East’s report shows that Commonwealth Bank of Australia is the leading
transaction banker to SMEs with 20.6 percent of primary relationships, followed
by National Australia Bank with 19.9; Westpac has 14.9 percent of primary
relationships in this segment; ANZ has 12.1 percent; and St George has 7.1
percent.
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For more information please contact:
Paul Bartholomew
Senior Consultant
East & Partners
Tel: +61-2-9222 1588
Mob: +61-410 400 156
paul.b@eastandpartners.com