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Edition 262 – Bad Banking

Written by Dean Robinson.

It’s profit reporting season for some of the big corporates at the moment, and the large banks in particular are showing some remarkable turnaround in their financial results.

Bad debt provisions have dropped as the economy has picked up. The number of loans on payment suspension have dialled back considerably. All of this means that profits are bouncing back quicker than was anticipated in the grim announcements made through the first and second quarters of calendar 2020.

Now for the bad news! How some of these banks are making a profit at the moment is beyond me. The number of instances in recent months where poor service and a general disdain for their customers has come up in conversation with my clients and colleagues is beyond outstanding. Try these for size:

  1. One of the Big 4 banks closing a term deposit of a business entity – and depositing the proceeds, incorrectly and without authority, into the bank account of an individual who, whilst associated with the business, didn’t have a legal right to the money.
  2. The Business Banking Manager of another Big 4 bank announcing via email on Christmas Eve that they were leaving the building – and in the absence of a dedicated replacement, notifying the names of two administrative assistants that might be able to help out! Two months later, there’s still no dedicated Business Banking Manager on a portfolio involving loans of seven figures.
  3. A Big 4 bank (is there a pattern here?) sending a loan payment reinstatement letter to a business owner (after the owner took up the option of suspending payments during COVID) advising them that the new payments would be 62% higher than pre-COVID. That thud you heard was the business owner dropping to the floor in shock when they opened their mail.
  4. A bank account for a business entity being set up in completely the wrong legal name. Without me picking this issue up on behalf of the client it could have created significant tax and legal issues for each of the entities and individuals involved, let alone the bank itself.

It’s my opinion this is the tip of the iceberg brought about by a raft of factors including:

  1. An over reliance on artificial intelligence in terms of client communication in an era where relationships (read, human intelligence) is what business owners are calling out for.
  2. The de-funding and downgrading of bank branches means, unfortunately, the front counter branch staff don’t understand the legal and business consequences of an “administrative error”.
  3. A focus on driving clients into non traditional bank areas, such as financial planning and life insurance, at the expense of getting the traditional banking side of things, such as loans and deposits, tidied up.
  4. The shuffling of business banking relationships amongst numerous individuals and, at times, different offices – which only confuses the client and doesn’t enable them to see the bank as a partner in their business, because who wants an unreliable partner?

 All of the corporate speak and feel good advertising campaigns amount to nothing if a bank doesn’t truly value nor understand the relationship it has with its small and family business clients. And that’s it in a nutshell – it’s a relationship which, by definition, is a connection between people and businesses. Relationships need to be nurtured and respected, with time invested on both sides to ensure its ongoing benefit to all parties involved. Otherwise, it’s merely a transaction – and you can go online, to any number of different options, to engage in a transaction.

If it has been more than three months since you’ve heard from your business banker, chase them up. It might be the conversation that you need that cements the relationship ……or leads to the start of a new one.