Businesses a bank 'floodgate' waiting to open

by BN21 Jun 2012

A research group has warned banks to focus on retaining their business credit clients, or risk an exodus once their confidence returns.

New research shows that during the GFC, 51.5% of the total Australian business market approached a new bank for credit due to tightened criteria and credit requirements from their existing primary bank.

A significant proportion of these clients - 70.9% - say they have either already changed (10.4%), or plan to do so (60.5%) as a result of their credit experiences over the last four years.

The research from East & Partners shows the majority of clients - or 37.8% - who reported approaches to new banks were SMEs.

East & Partners' head of client relationships David Brown said the intent by business customers to switch was at record highs, though general market conditions were causing reluctance to do so.

“Banks will need to deploy retention strategies to retain what could become a 'floodgate' effect, whenever surety around near term futures returns for Australian business," Brown added.