21 Jul 1991 – 2021, What’s changed for an Agribusiness Bank Manager?
Why are deals taking longer to settle in the agricultural lending sector compared to in 1991 when I started in the industry?
With 30 years agricultural lending experience under my belt, I offer the following comparisons:
- In 1991, managers had time to allocate a full day with a customer (and sometimes two days). I would inspect their property; review financials and cashflows, and discuss the past, present and future. Today managers try and fit 2-3 customer appointments into a day.
- In 1991, managers had time to fully prepare and articulate reports and loan submissions to credit, and to workshop those deals with peers and managers. Today we have files piled high, trying to work out which ones to prioritise, with half the priority coming from client demands, the other half from credit department demands, and another half from the compliance team and senior sales managers.
- There are fewer farmers in 2021 than in 1991, so why are there more files on the bank managers desk?
- Turnaround times up until 2007 were around 6 weeks from the day you met a prospective new customer to the day you settled their deal. Now we are talking 3 to 6 months turnaround for the same types of transactions.
Are we less productive despite mobile phone, internet, and computer technology advances in the last 30 years?
I believe the extended processes relating to lending have been caused by the following:
* Less trust between all the stakeholders (i.e banks, government, borrowers, and the broader community)
* More compliance created by the outcomes of periodic royal commissions, regulatory agency reviews, and internal bank reviews.
* The GFC in 2007-2009 had a significant impact on the banking system and the speed with which it can issue debt.
* The increase in intensity of drought, fire, plagues and other agricultural adversities adds pressure to the bank managers role, as many have to take on the added and time consuming role of tactfully guiding and supporting their clients through adversity.
However, the biggest issue we have in agricultural lending is that we have fewer agribusiness bank managers in total, and those that do exist, are operating less from heartland regional areas, and more from larger centres located closer to the coast and major cities.
Managers are being asked to manage more clients and undertake more compliance while at the same time achieving more sales.
The growing pressure on managers exacerbates the issue of burn out, which when they depart the banking industry, leaves even fewer managers to handle the work.
So to all borrowers, real estate agents, solicitors, accountants and other stakeholders waiting for a finance deal to be approved and settled – take note of the dwindling resources and higher demands that frontline agribusiness staff have to deal with. Accept that 6 week turnarounds no longer exist, and adjust your deal expectations accordingly.
To the senior levels of banks, invest in more agribusiness managers in more locations. I know that would reverse a 30 year trend that seems unlikely to change, but customers deserve more face to face interaction and less 1800 numbers to call centres in capital cities and overseas.
Finally, well done to those agribusiness bank managers still in the game who juggle the competing interests of so many stakeholders.