(9 May 2011 – Australia) Despite plummeting satisfaction levels amongst SME businesses across several relationship and product attributes, SMEs’ banking relationships remain stickier that ever, according to business banking research specialists East & Partners’ latest Australian SME Banking Markets report.Prior to the global financial crisis the majority of SMEs regarded their
transaction bank to be their primary banking provider or “home” bank. Post GFC
this view amongst SMEs has dramatically changed, with nearly three quarters of
businesses in this segment now nominating their lender, up from only a quarter
in April 2008, as representing their primary banking relationship. This change
has major impact over both the ways banks look to use this relationship as a
cross sell platform and the way SMEs in turn look to engage with their bank(s).
Alongside this shift in perception of “home” bank, SMEs loyalty to the
relationship started to decline, and satisfaction with the value for money they
are receiving from their primary banking provider has deteriorated to new lows.
“This has created a new paradigm for the industry, one which will take time for
both providers and SME customers to work through”, said Paul Dowling East &
Partners’ Principal Analyst.
“Many SMEs now have reduced appetite for debt funded growth in their businesses,
having deleveraged during the GFC and remain very cautious about near term
futures for their businesses – not an especially powerful cross-sell platform
for banks to leverage in chasing replacement revenue growth in a flat credit
environment”, he added.
Yet despite this, SMEs still remain bonded to their primary banking provider
with levels of intended churn lifting only marginally since the GFC, due in part
to bank credit conditions and in part to a perceived lack of choice in the
market.
In April 2008 34.5 percent of SMEs said they would definitely, or it was highly
likely, that they would be making a move within the next six months. Now less
than 18 percent of businesses in this segment are looking to move.
“Actual conversion rates in outlook SME switching have also plummeted with a
reduction from a pre-GFC average of 50 percent of customers changing all or part
of their relationships to now less than 20 percent”, Mr Dowling noted.
About East & Partners’ Australian SME Banking Markets report
A detailed analysis of product usage, market share, share of customer wallet,
bank by bank customer satisfaction performance, share of mind, account churn and
buying characteristics for small to medium enterprises in the A$1-20 million
turnover segment across all core transaction, internet, debt, financial markets,
working capital, asset management and advisory products every six months.
For more information please contact:
Kimberley Burgess
Client Communications
East & Partners
t: 02 9004 7848
m: 0405 250 796
e: kimberley.b@eastandpartners.com