Big banks still don’t get it when it comes to working with SMEs

It didn’t surprise me one little bit when I read an article in the Australian Financial Review on June 9, 2011, titled Big Banks deluded about small business. The article surmises that the vast majority of small business bankers are nothing more than product floggers trying to sell a product rather than providing consultation expertise to their SME clients, on their specific needs, and working with them to get the best out of their business banking relationships.

Most disturbing is the bank’s illusion of their customers’ satisfaction with the service they’re receiving. The reality is of course entirely the opposite. Are the banks deluded about what they think they do for small business in Australia?

The answer is “yes”, if the research by Ian Freeman, of the business Non Executive Management, is anything to go by. His research highlights the chasm between what banks think and the reality with their customers.

From a SMEs perspective desirable attributes of a business banker include:

• Understanding and supporting my business when help is required.
• Being readily available.
• Providing sound and constructive banking advice.
• Interest in a long-term relationship.
• Understanding of key growth drivers of my business and ability and willingness to tailor products and services accordingly.

The banks claim agreement with these attributes but their actual deliverables are very different. For instance, banks thought 80% of SMEs would agree with the first statement: “understanding and supporting my business when help is required”, when in reality the figure is less than 30%.

These figures are backed by Ernst & Partners, and research states that to engender loyalty the figure needs to be 90%+.

Worse still is that when SMEs were asked if the business bankers, “Provide sounds constructive banking advice” and “Understand the key growth drivers of the business and tailors products and services accordingly” less than 3% of SME’s agreed, yet the banks thought that 75% would agree.

Roy Morgan Research states the area of poorest performance across the banks is in understanding SMEs’ industry and poor knowledge of their business.

I’ve had experience working with business bankers and developing their consultative selling skills and sales https://www.barrett.com.au/sales-training.html) capabilities. However, my work has been with corporates and with the upper end of SME business bankers, where investing in more professional business and sales practices is mainly supported, yet these same skills and capabilities are also needed at the small business end of the market where business are more vulnerable and in need of expert guidance and advice.

Many of the business bankers I have worked with are business savvy, experienced and able to work in a more consultative manner with their business clients. For small business banking roles however, recruitment is mainly limited to young graduates with little business experience and often far less aware about how businesses are run. Many are under-skilled or in a weaker position to offer real advice and experience about how to run and manage a business which makes me wonder why banks think they are doing the right thing by their small business clients.

Freeman’s research also finds that the small business banking sector is too “income” focused while SMEs are “outcomes” focused. The banks think that because companies bought their products they were happy and loyal, yet in reality many SMEs have nowhere else to go to have to buy their products and loyalty is not commonplace. Simply because SMEs have no other choice than to buy their products from the banks does not necessarily mean they are happy with their service or loyal to the bank.

Worst of all, one of the banks performed a 10 week trial where their small business bankers were asked to genuinely model the ideal attributes listed above and find out what their clients really need rather than talk about product. Even though the result found the bank would boost sales by 94% by working this way and customers were much happier with the approach, the bank in question abandoned the trial and went back to what they always did.

With 95% of all businesses in Australia in the SME category, don’t we deserve better than this? Banks would do well to rethink their strategy in serving the small business sector and transform their small business bankers from product floggers to consultative business practitioners. SMEs will thrive and grow from a consultative approach with bankers who know how to understand a client’s needs and business strategy, work with ambiguity and business complexity and facilitate access to the right business banking products and advice. We would then see what a difference this could make to our business community and success.

Remember, everybody lives by selling something.

Sue Barrett practices as a coach, advisor, speaker, facilitator, consultant and writer and works across all market segments with her skilful team at BARRETT. Sue and her team take the guess work out of selling and help people from many different careers become aware of their sales capabilities and enable them to take the steps to becoming effective and productive when it comes to selling, sales coaching or sales leadership.To hone your sales skills or learn how to sell go to www.barrett.com.au.