09 Feb WHERE IS MY BANK MANAGER?
What a great time to be in business. Low interest rates, industry in full swing and a clean calendar year ahead to execute much anticipated strategy.
So, what unexpected business gophers are going to jump in front of you this year? We know one that you will need to take heed. In order to clear your financial runway, this week’s blog is going to be pertinent, relevant and material so please read on.
If you are running a business supported by debt finance (or projected to be), then you will enjoy our synopsis on the forthcoming qualitative banking environment you are most likely going to experience. Enjoy Where Is My Bank Manager?
WHERE IS MY BANK MANAGER?
On 2nd January 2018, James Frost hit the front page of the Australian Financial Review with his brandish article on the banks slashing jobs. He noted that “the big four banks are set to accelerate plans to thin the ranks of full time employees by 20,000 in 2018…”
This is at a time when business owners running multimillion dollar businesses making real time financial decisions that pulsate with opportunity and consolidation. A time when already they struggle to make contact with their banks and achieve commercial turn around times with basic communication and financial outcomes.
Receiving the Pink Slip
James Frost publicised that NAB is to shed 12% of its workforce over three years. It will naturally be a combination of non-replacement, retrenchment and retirement. But effectively, what used to be there supporting commercial borrowers (and other bank clients), won’t be in the future.
The motivation for the banks to shed jobs is to manage costs. It is the only lever they have left to keep the profit machine rolling for the shareholders as earnings growth slows and costs become harder to control.
According to the article, ANZ was “one of the first to admit there will be fewer branches in the future…” But ANZ will not be alone in this race, nor just NAB for job cutting. It is a phenomenon that is currently washing over the banking industry.
So, what is the bank’s recourse to their “slash and burn” towards human capital? Their aim is to engage software engineering, data, architecture and security experts to automate processes and plug the gaps.
How will this translate into customer experience? Time will tell, but for commercial borrowers we all know too well that each business has its unique set of credit parameters and characteristics. And with infinite trading permutations across all industries, enterprises and individual businesses alike, it would be challenging if not impossible for even the most renown software engineers to replicate service quality outcomes into an automated algorithm. In the interim, human capital at the back end of processing is stripped and the borrower is prospectively left floundering.
The Silver Lining
Banking, like all industries, is an evolution of micro (and sometimes quantifiable) advances to adapt to the new world order. Underpinning their transition is the bank’s continual investment into advancing their formal engagement with external credit professionals “brokers”. Experienced finance brokers are providing commercial borrowers with the necessary support, market intelligence and intellectual property around efficient and engaged banking practises.
Astute brokers know exactly how to present a borrower’s business to the banks, foresee credit issues, mitigate the challenges, engage the right banking career professionals and “get the job done”.
Around 53% of residential mortgages are written through brokers, with commercial broking now capturing a growing share of professional engagement.
THE ROBINSON SEWELL PARTNERS COMMITTMENT
Regional, rural and remote business owners (agribusiness and commercial) deserve and require professional credit support to ensure their competitive positioning is not being eroded against their city counterparts simply because of their postcode or state of operation.
Our commitment is to meet, engage and fortify regional businesses, regardless of their location. Accessing capital, creating capital flexibility, improve the cost of capital, reducing funding risk are some of the outcomes.
We demystify banking, remove the fear of change and take the hassle out of change when it comes to banking.
We have teams across NSW Brad Sewell, Ian Robinson, Andrew Toole, Michael Stout, John Waterman, South Australia (Deb Purvis) and Tasmania (David Robertson). With reach into Victoria, QLD and the remaining states.
By uniting financiers with astute family and corporate businesses with funding strategies unique to their circumstances and their industry.
CALL US FOR A CHAT
Sharing market knowledge and revealing opportunity is what we enjoy with astute business owners. Give us a call, we have much to discuss and be a part of the RSP club.