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How do Banks rate downunder in the Middle Corp markets?

How do Banks rate downunder in the Middle Corp markets?

(Australia) - Patchy is the answer, although generally performance is seen to be better in derivatives than investments, debt or advisory product lines by those customers engaging these products, according to just released research on this high margin segment by industry analysts East & Partners.

Many of the core transaction oriented products, the "keep it simple" offerings are rated poorest by mid-corporates. The best three rated product lines of the 22 monitored are:

  • Interest Rate Swaps

  • Foreign Exchange Swaps

  • Forward Rate Agreements

The worst rated products of the 22 covered are:

  • Foreign Currency Term Loans

  • Floating Rate Notes

  • A$ Term Loans

Interestingly, the first two of these are amongst the least commonly engaged, not surprising given existing customers' satisfaction levels. The performance of A$ Term Loans as an absolutely core, vanilla product offering amongst these three worst products is concerning. This fourth most commonly engaged product by mid-corporates and their sixth most importantly rated should be attracting considerably higher levels of satisfaction form customers. Anecdotally, it examples a frequently offered comment at interview, that our bankers can't get the simple things right in their service performance yet are starting to talk to us about new and different services. Under-performance in such a core product will undoubtedly act as a brake on the speed with which new products get engaged by these customers.

Notably, not one of these 22 product lines have been rated at worse than average satisfaction by customers. Generally their bankers are seen to be doing well in product terms. Such experiences are, however, relative and may well in part derive from this mid-market segment historically being a demand pulled one, ie. customers have generally gone looking for product solutions rather than having competing service providers aggressively promoting them. With the climb in expectations proactive product marketing often engenders with customers, this overall level of satisfaction with current product performance may well drop in the short term as the segment becomes increasingly attractive to banks.

Substantial differences in these ratings exist between the major bankers in the market and valuable comparisons can be made between the bank-by-bank ratings of importance and satisfaction within each of these product lines.

Overall Satisfaction with Treasury Products - Whole of Mid-Market
N: 653 Average Satisfaction
Rating Reported
1 — — 2 — 3 — 4 — — 5

(satisfied)                      (dissatisfied)




Deposits and Investments  
  - On Call Accounts 2.24
  - Term Cash Deposits 2.16
  - Commercial Bills / CDs 2.26
  - Commercial Paper 2.09
  - Floating Rate Notes 2.32
  - Managed Funds 2.23
Debt Products  
  - Overdraft Facilities 2.10
  - A$ Term Loans 2.29
  - Foreign Currency Term Loans 2.36
  - Commercial Bills 2.24
  - Leases 2.00
Equity Raising 2.16
Corporate Advisory Services 2.07
Merger & Acquisition Advice 2.14
Interest Rate Swaps 1.91
Foreign Exchange Swaps 1.93
Interest Rate Options 2.09
Foreign Exchange Options 1.99
Forward Rate Agreements 1.94
Fixed Interest Rate Products 2.10
Spot FX 2.04
Forward FX Contracts 2.01

And how happy are these markets with their banking relationships?

Bank performance on key relationship and service issues is considerably poorer than with products. These "horizontal", product-independent factors have been generally rated as more important to the customer than their product use, yet have produced weaker satisfaction in this mid-corporate marketplace. The three worst performing of these 11 issues, all rated below average, are:

  • Value for Money

  • Proactivity

  • Understanding (customer's) Business Needs

This latter factor has been rated the second most important to customers yet attracts third worst satisfaction rating.

Relationship Satisfaction Ratings - Whole of Mid-Market
N: 653 Average Satisfaction
Rating Reported
1 — — 2 — 3 — 4 — — 5

(satisfied)                       (dissatisfied)
  Overall Product/Service
Performance with
Primary Product Bank
Relationship Management 2.05
Understanding Your Business Needs 2.69
Proactivity 2.82
Innovation 1.98
Loyalty to the Relationship 2.18
Quality of People 1.99
Customised Banking Solutions 2.05
Pricing Competitiveness 2.25
Value for Money 2.88
Back Office Efficiencies 1.89
Documentation Quality 1.80
Knowledge of Your Industry Sector 2.11
Economic Analysis and Information 2.36
Note: a synthesis of all individual service factor ratings across all banks

Clearly attention is required to translate the effectiveness with which banks manage their top-of-town customer relationships into this mid-market segment where the sale is entirely different and customer's expectations more holistic if product sales success is to occur.

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