No love for big banks from owners of small businesses, BNZ parent reveals
More owners of small and medium-sized businesses think badly of their banks than like them.
National Australia Bank, which owns BNZ, has published a chart of “net promoter scores” for the big four New Zealand banks showing all have more detractors” than “promoters” among owners of small and medium-sized businesses.
The scores got worse during the Covid pandemic, with BNZ “partnership banking” boss Paul Carter saying reduced branch opening hours, frustration with the government-backed Business Loan Guarantee Scheme, and long wait times for phone banking had all been issues.
National Australia Bank’s chart shows the average positive net promoter score (NPS) for ordinary household customers was 28.4, but for business owners it was -19 at BNZ, with another banking boasting a score of -20, and the other two scoring -17 and -3.
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NPS shows the proportion of an organisation’s customers who would recommend it to other people, and is calculated by subtracting the proportion of customers who are “detractors” (who score it 0-6 on a scale of 0-10), from the proportion of customers who are “promoters” (who score it 9 to 10).
The chart only identifies BNZ, with the other three big banks going unnamed.
Whangarei beauty salon owner Jodhi Wharfe said while larger businesses got dedicated business managers at their banks, smaller businesses had to deal with centralised business banking hubs.
“You get put onto hubs, or onto phone banking teams, so it’s hard to get things done. You kind of sit in between retail and business banking,” said Wharfe, who was a bank branch manager and mortgage manager before she launched into business.
“You don’t have a dedicated person. You’re not worthy,” Wharfe said.
“Banks are trying to save money by not having a dedicated person for businesses which don’t make them enough money,” Wharfe said.
There were various problems with that, including having to repeatedly explain the nature of your business to people who were not familiar with it, including to bank staff who had never owned a business.
Owners of smaller businesses could also find themselves being shunted around between retail and business banking hubs when seeking help, Wharfe said, and sometimes found themselves just giving up.
“I don’t even have a business credit card because it’s such a pain to get one,” Wharfe said.
Carter said BNZ viewed the gap between its retail and small business NPS scores as a call to action.
“Time to decision” was something BNZ was trying to bring down, as well as making it easier to get things done.
Both of those were issues raised in a 2019 report by the Small Business Council, which concluded banks had few competitors for business lending.
“A lot of due diligence steps are involved in the assessment of bank loan applications, which can make the process time-consuming,” it said.
“The assessment and decision procedures are similarly resource intensive and lengthy. Businesses are often left waiting on the outcome of approval processes and they may miss opportunities to develop, grow and reach their potential.”
Carter said BNZ was aware its SME customers were frustrated with the waiting times to get through on the phone, and had created a priority queue for SME owners on its phone-banking service.
It had also investing heavily in its online My Business Live service to help businesses track their financial positions and performance.
Accountant Terry Boucher, who served on the Small Business Council, said banks’ business banking systems were designed around larger organisations, with full-time finance officers.
But many businesses tracked their financials in a cycle tied to the tax year, and, unlike larger businesses with chief financial officers, were not always able to quickly produce the information banks wanted.
“For small businesses, getting the information together to be presented in a form the banks want isn’t always easy,” Boucher said.
That was beginning to change as the likes of Xero changed accounting for small businesses, he said.
But, there were other issues, Boucher said.
“Speaking from personal experience, the banks charge like wounded bulls,” he said.
That could include high lending rates, even in cases where loans were secured against business-owners’ homes.
Boucher also felt that banks marketing of themselves as being in “partnership” with the businesses they banked, was belied by their “width not depth” approach to banking, where SME owners did not have deep, personal relationships with their banks.
“I don’t feel as if I am in partnership with my bank,” Boucher said.