Bank sees big future in small business

By Richard Braddell

WELLINGTON - The National Bank has launched an assault on what it sees as the major growth sector in the business market - small business banking.

The programme is built around providing small businesses with sophisticated services once the preserve of large companies.

The campaign was "soft-launched" in the lower South Island in May, with the rollout now moving up the country.

National's director of corporate and business banking, Jeff Greenslade, said its approach was based on the realisation that medium-sized businesses were rapidly disappearing as the market consolidated into big and small players.

Globalisation had resulted in big-business needs becoming increasingly commoditised, and small businesses required the same sophisticated financial services, such as letters of credit and export facilities.

In the National Bank's view, the business market has changed dramatically from 15 years ago when it was dominated by producer boards and large exporters and importers, often operating under the shelter of official protection.

But switching to a new, small-is-beautiful, focus requires a considerable attitude change for a bank whose traditional culture has pushed the brightest and best towards corporate banking.

But it now believes those skills can be best deployed in small-business banking, a message it is sending to staff who still aspire to deal with big business.

Mr Greenslade, whose own background is in corporate banking, said that affordable technologies had made small businesses much more viable, particularly in services such as consultancy and tourism.

Growth in consultancy had been boosted by big businesses shedding employees who often returned immediately as highly paid consultants. That factor has been one of the reasons businesses with five or fewer employees have grown in number by 67 per cent in the past five years.

Collective staff numbers in that group are also up, by 20 per cent.

But Mr Greenslade said technology posed a dilemma for the banks, they had to decide whether to use it to replace personal customer contact or supplement and extend it.

While technology could help to "categorise" customers and match them to their business needs, the bank had decided to go down the people-first route and supplement the service with technology.

Customers had resoundingly endorsed this approach.

The result is that the National Bank has moved to manage businesses, whatever their size, in the same division of the bank. All customers are being allocated relationship managers who will be the first port of call for a variety of services in addition to the usual lending.

The bank sees a developing role in helping to identify sources of venture capital. However, its new-found appreciation of small business does not extend to providing it.