The Commonwealth Bank is bulking up its business banking capability by hiring 120 new bankers, as it eyes a bigger share in the lucrative small business market.
Amid claims from regulators that banks are being too cautious in their lending to small firms, CBA said its hiring of the new bankers, to target “micro” businesses turning over less than $1 million a year, was a strong signal of intent.
The new hires come as it eyes a bigger slice of the small business market, where National Australia Bank is the market leader.
“That’s a pretty big statement of confidence and commitment to the small business sector,” said CBA’s executive general manager of business customer solutions, Clive van Horen.
Despite the popularity of digital services, Mr van Horen said many of its business customers still needed to talk to a banker to deal with “more tricky problems.”
“Businesses are busy, they don’t always have the time to solve the problems themselves. So having the face-to-face or person-to-person bankers available is really important.”
The expansion plan comes after regulators in recent months have accused some banks of being too cautious in their business credit decisions, after a period of intense scrutiny of Australia’s big lenders.
Mr van Horen said some firms were “quite reluctant” to borrow money, but also acknowledged the environment of recent years made it “inevitable” that banks would be more cautious. He said there was no policy to be more cautious towards lending, but it was a “a hearts and minds question.”
Bell Potter analyst TS Lim said business banking had higher margins than retail banking, noting the major banks had often sought to expand in this market. “The banks have always been saying there are green shoots, but it hasn’t happened. Once the cycle starts, it should be a better outcome for the big banks,” Mr Lim said.
Mr van Horen said CBA lent about $500 million a week to business, it had been growing broadly in line with the market.
As banks fend off competition from fintech firms eyeing the business market, CBA has this year introduced a product called Bizexpress that uses customers’ transaction data to make loan approvals, instead of requiring a customer’s financial statements.
Mr Van Horen said the bank had been expanding this product to include different types of loans, and he also highlighted a recent move to relaunch business accounts with a fee-free option.
Mr Van Horen said the bank’s biggest source of complaints in this area was its monthly $10 fee for businesses accounts, which gives customers a certain number of branch transactions a month. Customers will now have the option of choosing a fee-free account, which would instead require fees be paid if they visit a branch.
CBA’s current group executive for business banking, Adam Bennett, is leaving the bank at the end of February, to be replaced by Mike Vacy-Lyle.
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