The small business sector is increasingly shopping around for the banking services that best suit its needs, according to research financed by the Australian Bankers' Association (ABA).
The report, conducted by KPMG Consulting, shows almost 40% of the small businesses who changed banking providers over a two year period chose a non-bank provider.
Regional banks have significantly increased their market share over the past five years, doubling their share of deposits to an estimated 12% and a 20% increase in their share of debt, KPMG Consulting managing director Martin Blake says.
"Small business are taking advantage of the variety of financial service providers and are increasingly using multiple providers in a way that best services their needs," Blake says.
"Significant innovation is occurring in the agribusiness sector with a number of banks and non-banks, often in joint ventures with other rural companies, offering a range of tailored banking and financial services to small business."
The research also shows:
- bank fees paid by small business have grown at a slower rate than those paid by large businesses
- interest rate margins have reduced
- 57 institutions supply 720 debt products for the sector
- 44 institutions supply 72 small business transaction accounts
- $25 billion has been lent to small business in the year to September 2001
- 80% of small businesses use some form of online banking.
ABA chief executive David Bell says small business is demanding banks "creatively tailor" a growing range of products and services.
"The report found the new products for small business are generally secured against residential property, and a number of banks have also made available loans to this sector against their expected cashflow, or using other assets as collateral such as plant, equipment and inventories.
"Small business consumer rights have also been advanced through the Code of Banking Practice which has been expanded to include small business, not just consumers."
To read the whole report, click
here.