We asked three bankers their opinion on how small business owners should choose their business bank, the questions they should be asking, whether they need a separate bank for their personal affairs and how important fees are. Meet the three bankers:
1. Mark Harper, who is executive manager of business lending at Suncorp Bank.
2. Mark Sydes, national manager, commercial banking at Bank of Queensland.
3. Cindy Batchelor, executive general manager, small & emerging business at NAB.
Q: What are the key things for small business owners to consider when choosing a business bank?
When choosing a business bank, here are some key questions you should consider:
- Will I be assigned a Relationship Manager, and how accessible are they?
- If I am not assigned a Relationship Manager or I can’t contact them, is there a call centre I can contact?
- How satisfied are other business customers with the bank?
- Can the bank’s business banking manager take care of all of my needs, or will I have to deal with two separate managers for personal and business banking?
- What tailored packages are available for my industry / line of business?
- Will I receive value for money i.e. are the products and services on offer competitively priced?
- For merchant clearing, how quickly do I get paid?
Bank Of Queensland
There are three key things that are vital to a business owner’s banking relationship: price, product and customer service. Each element is extremely important.
Price is always a consideration for SME owners and of course product suitability is absolutely vital. Having banking products that meet your needs and work with you to grow your business is essential, as is the convenience that comes with new functions such as mobile phone banking.
But probably most important is customer service. Having a dedicated banker who understands your business, your objectives and your long-term plan is absolutely crucial to the success of your business. Not only do business owners need a banker who can quickly help them capitalise on opportunities, they also need a banker who is proactively helping identify new or different products that are more suitable to their business.
Small business owners should be asking their bank:
- What business products provide me the best fit to match my current and projected cashflow?
- How can I use my stock and debtors to inject additional cash into my business?
- Do you have import trade finance facilities?
- Are there additional benefits for my staff?
Your banker should be more than just your finance provider – they should be your business partner, taking the time to understand your business, your industry and your personal and business aspirations. You should seek out a business banker that understands the current economic climate and the dynamics that may affect your business.
While there are a range of questions that need to be considered when choosing the right bank for your business, the following are a good starting point.
- Are they accessible in the way I need? Are they located in my local area or available on the phone and online?
- Is the bank able to service both my personal and business financial needs? Are they able to service and support you when and how it suits you?
- How are fees and pricing determined? The bank should be able to provide a detailed breakdown of their fee structure so you understand how this works.
- What products and services does the bank offer for my business? Larger business banks will be able to provide additional services and products including point of sale capability and bankers that specialise in the sector.
Q: Is it good or bad to use the same bank for your business that you use for your personal banking needs? Or is it irrelevant?
Your business banking relationship manager can and should service all of your business and personal banking needs. They are generally very experienced and can help you organise your banking in such a way that running your business is made easier, ensuring that your broader relationship with the bank is recognised and rewarded.
Bank Of Queensland
It depends on the bank! At BOQ, we understand that many small business owners have complex and intertwined business and personal banking needs. So we actually reward our small business customers for having all of their banking with BOQ with interest rate discounts and fee waivers. And it doesn’t just make financial sense. It is also common sense. Why should a customer have to explain their financial situation to two different people at the one bank?
Unique to small businesses is the intertwining of personal and business banking needs. For example, in many cases small business operators use their residential home for security for their business loan. This means that, unlike consumers or large corporates, small business operators require their banker to advise them on their business and their personal banking need, not one or the other.
Q: How important should fees be when considering the best business bank for you?
Fees generally represent a cost for a service, and customers should understand what level and quality of service they are receiving for that cost. Banks make their money from both fees and interest spread, based upon your business’ profile. SME owners need to consider the total likely cost of interest and fees. One bank may appear to have a lower interest rate, but other fees and charges may actually make them more expensive when all costs are considered.
Bank Of Queensland
There’s no denying that fees are important. Sensible business owners are watching every penny. But they are also looking for value. If you find a business banker who is willing to go the extra mile for you, to really understand your business and work with you to help you grow, then price can become relative.
While competitive pricing is important factor when deciding which bank is right for your business, there are other components that need to taken into consideration. The understanding and insight your banker can provide is just as important as price.
Q: What should a good business banker offer you?
A good business banker:
- recognises that SME owners are typically time poor, so are responsive and help the SME owner solve their financial challenges quickly and effectively.
- understands your business and its success drivers, and help you tailor a banking package that saves you time and money, helps you manage risk within your business, as well as ensuring that you have access to cost effective funding to grow your business.
- will come to you on your premises, and gain a better understanding of your business.
- provides proactive contact rather than passive or reactive service.
- will introduce you to specialists from the bank. Business banking managers are like your local GP – they can provide most general services, but if you have a specialist need (like a complex transaction to finance the importation of goods from overseas), the business banker will call upon specialist support to ensure that you receive the highest quality advice.
Bank Of Queensland
A good business banker (or Owner-Manager, at BOQ) should offer you their direct phone number, personal attention, regular catch-ups to understand your business and fast and efficient turnaround on your enquiries. That is the baseline, but a good business banker will offer a lot more.
A good business bank should understand you, be responsive and be there when you need them. They should have expertise across personal and business banking products so that they can be that one contact point. They will have training and authority to make credit decisions for their customers. So when you deal with a banker, you know you’re dealing directly with the person who is making the decision, not a go-between. It’s about supporting you when you need it most and having the knowledge and authority to back it up!