The latest Business Banking Customer Report by Publicis Sapient revealed a growing dissatisfaction among SMEs with regard to their banks as 40 per cent feel only ‘somewhat positive’ about their bank, and five per cent have expressed negative sentiments.
The report noted that these figures reflected how Australian banks are failing to grasp the SME banking opportunity, despite the rising importance of business banking and amid a renewed regulatory focus on the surcharges these financial institutions have been charging.
Tales Sian Lopes, Head of Financial Services, Australia & New Zealand, Publicis Sapient, commented, “SMEs are key to Australia’s growth and the engine of our economy. With mortgage margin erosion impacting banks profitability, business customers are playing an increasingly important role in banks’ growth strategies.”
The research highlighted that as far as their banking preferences are concerned, SMEs prioritise reliability (47 per cent), customer service (43 per cent) and convenience (39 per cent), while technology and innovation (29 per cent) rank relatively low.
Lopes added, “Most Australian banks’ proposition for SMEs is little more than a rebadged retail offering. There is a huge opportunity for banks to offer a compelling, data-driven business solution to meet SMEs needs, and build a market leadership position that will drive future growth and profitability.”
Crackdown on surcharges affecting payment preferences
The findings come amid the government’s crackdown on unfair and excessive card surcharges with new funding for the ACCC to tackle excessive surcharges and an RBA review of merchant card payment costs.
The research also found that 78 per cent of SMEs closely monitor their merchant fees and that the top driver for them switching merchant relationships is lower costs and/or fees (46 per cent).
While 78 per cent of SMEs prefer card and online payments, 49 per cent have opposed the elimination of cash services. Even among those SMEs who favour digital banking, 59 per cent still recognise the importance of physical branches for certain services. In fact, 54 per cent of SMEs would consider switching bank if their local branch closed. A further 28 per cent indicate that they would stay but would be unhappy about the change.
Lopes said, “Changes of card surcharges could have unintended consequences which will impact consumers, SMEs and the banks themselves. It could potentially accelerate the move towards digital payments – reducing the volume of cash payments across the economy. This will reshape how banks evaluate the use of their branch networks, and could even lead to fees for cash services. Our research shows that one in four Australians value cash services so much they would be willing to pay additional fees of up to 5 per cent to use cash.”
“To succeed with SMEs, banks will need to navigate a complex set of preferences and behaviours, especially around cash and payments. We also see clear opportunities to differentiate on experience and technology,” he added.
