Are big banks losing touch with SMEs?

by Gerv Tacadena05 Mar 2021

It appears that there was a debate whether small and medium-sized businesses are getting enough attention from big banks amid the uncertainties of the COVID-19 pandemic.

A survey commissioned by Judo Bank showed one in five SMEs had no interaction with their big banks despite the pandemic lockdowns. Of the SMEs who reported they had some form of contact with one of the big banks, only 15% said the interaction was "high quality".

Chris Bayliss, chief financial officer of Judo Bank, said at least a quarter of SMEs looking for finance to grow their businesses were rejected by these banks.

“It’s nothing short of scandalous that despite the huge amount of small business support and stimulus made available to lenders by Canberra, our major banks have effectively shut their doors to Australian SMEs when they needed them most,” he said.

“This is of serious concern not just to SME business owners looking to grow and employ more Australians, but for the economy more generally at a time when we should be doing all we can to create jobs and get the post-pandemic recovery under way."

The study also found that while 45% of SMEs are in an "expansive growth phase", the absence of the support from major banks could limit their potential. In fact, one in four SMEs are in the dark about their strategy post-crisis.

"This has been a major issue for customers of the big banks during COVID-19, who have had no option other than to ring 1800 numbers and hope to get through to the right person," Bayliss said.

However, another recent study showed a different story. A study by Roy Morgan showed that the satisfaction rate among SME owners for the big banks has improved over the past year.

The Roy Morgan study showed that the satisfaction among small business owners for the big four was at 71.2% in the 12 months to January 2021, an increase of 3.4% points from a year ago.

Of the big four, Commonwealth Bank had the highest satisfaction rating, followed by Westpac, ANZ, and NAB. ANZ reported the highest improvement in satisfaction rating from last year.

"The big four banks have performed exceptionally for their customers during the last year, and this is reflected in the latest business owner banking satisfaction showing increased satisfaction for the big four banks as a whole," said Michele Levine, chief executive officer of Roy Morgan.

Despite these conflicting studies, the challenge remains for big banks and other lenders to support small businesses especially as the withdrawal of government stimulus looms.

"The challenge for banking and financial institutions lies in dealing proactively with businesses that may well run into trouble without the JobKeeper wage subsidy," Levine said.