The Pearl Bank Management Service, developed by commercial finance advisory firm Pearl Financial Services, provides businesses with an independent banker who can act as a go-between. It allows businesses to essentially hire their own banker, enabling them to avoid day-to-day dealings with their bank.

Businesses that use the service are not only saving time but are also getting better access to funding by having a banker on the team, according to General Manager of Pearl Financial Services Nathan Keating.

“Having a banker on your team that you can use as a sounding board, and who can provide strategic input to make you a better banking customer over time, really works,” Mr Keating said.

“And when you bank manager changes for the third time in a year, your Pearl Banker goes in before you to warm up the new manager and ensure that continuity is maintained.  You care less because you essentially have the same banker – he just doesn’t work for the bank,” Mr Keating added.

The Service can also take some of the stress out of managing a relationship with the bank, affirms Mr Keating.

“Banks have a natural conflict of interest with their clients… a client can never feel totally at ease telling the whole story to their banker for fear that the bank will react badly and make life difficult”

“In reality though, Banks will always lend to great businesses that make great banking customers…here is a service that can help businesses develop a clear path to achieving this,” said Mr Keating.

Thanks to their lack of experience, many first homebuyers make serious decisions based on one or two factors that should be taken into consideration only alongside a wide range of others.

When home loans are discussed, interest rates are often given more weight than is sensible. Friends and family have strong opinions on the best lender and loan, with their prior experience often seen as expertise. Too often, a potential borrower doesn’t shop around, believing there is little difference between lenders, loan product suites and/or that one lender is much more secure than another.

According to Mortgage Choice’s Recent First Homeowners Survey, only 22 percent of Australians base their choice of lender on the fact that it was ‘the cheapest all-round’. This means 78 percent did not. How much money do these borrowers waste by not looking at all the facts and figures?

Mortgage Choice spokesperson Kristy Sheppard said, “A home loan’s interest rate is important but a potential borrower shouldn’t look at that aspect alone before choosing a lender and loan product. Upfront, regular and switching fees should also be carefully considered as should features such as offset accounts and redraw facilities. Service quality is another element.”

“Nor should a borrower base their decision solely on the fact that they do everyday banking with a lender, although this may mean they are able to contribute less of a deposit to a property purchase. The many aspects of a home loan and the term of commitment make it a vastly more complex product when compared to an everyday banking facility, hence the same lender may not be appropriate for both.

“Although it is tempting to make life changing decisions based on the opinion of people closest to us, taking out a home loan is a very important financial commitment that often has ramifications if executed incorrectly. Take the time to choose wisely!”

In an announcement today Federal Treasurer Wayne Swan announced the closure of the Guarantee of Large Deposits and Wholesale Funding (Guarantee) program.

The Guarantee had underpinned Australian financial institutions during the global financial crisis, however it was always intended as a temporary measure, which has now been removed with the banking sector showing renewed strength and improved availability of wholesale funding.

“On 7 February 2010 I announced this decision on the unanimous advice of the Council of Financial Regulators, who advised that no Australian bank, building society or credit union will need the Guarantee to fund itself due to improvements in bank funding conditions.” Treasurer Swan said.

“Australian depositors will continue to be protected by the Rudd Government’s Financial Claims Scheme – a separate policy giving free coverage for all deposits up to $1 million. That $1 million cap will continue until at least October 2011, when it will be reviewed.”

Mr Swan was quick to chastise any plans by banks to use the removal of the guarantee as an excuse in raising interest rates to customers.

“Critically, our highly-regarded financial regulators have explicitly advised that removing the Guarantee will not materially affect banking sector funding costs.” Mr Swan Said.

“So there will be absolutely no justification for any bank to raise interest rates beyond any future Reserve Bank movement, given banks’ interest margins are back above pre-crisis levels.”

“The banks and other lenders have so far paid around $1.3 billion for the use of the Guarantee, and will pay around $5.5 billion over its full life.”

“The Guarantee has also been vital in helping to support banking competition by offering funding certainty to Australian non-major ADIs, who used it to raise over $65 billion in cheaper funding.” Mr Swan said.

MYOB CEO Tim Reed says the data service will form part of an innovative series of new offerings from MYOB, Australasia’s leading business and accounting solutions provider.

“Choosing BankLink as our data supplier will allow us to provide greater choice, and convenient, secure and robust solutions for businesses and accountants,” says Tim Ree.

Mr Reed says BankLink is a locally owned success story, which has been working with banks and accountants across New Zealand and Australia for 23 years to streamline the accounting process for small business clients.

BankLink works with over 100 financial institutions and 4,000 accountants in New Zealand and Australia, managing more than 10 million transactions per month from over 350,000 accounts – up to five times more than any other bank data supplier in the region. MYOB provides accounting solutions to over 1,000,000 Australian and Kiwi businesses and over 10,000 accountants in practice.

BankLink chief operating officer Richard Reese says the agreement is an exciting opportunity for BankLink. “This arrangement is a significant endorsement of our technology and expertise in the secure collection and delivery of data. It’s also an opportunity to extend into a new market while staying focused on what we do best.”

“By providing BankLink data to MYOB’s new products, we are able to extend our data offering into a new market – those small businesses who want to manage their own accounting solutions,” says Mr Reese.

Tim Reed says the new data feeds will be available in a range of new products to be released to both Australian and New Zealand businesses over the coming months.

“This agreement will allow transactions from over 100 banks and financial institutions to be imported directly into MYOB products in the future, bringing real time savings for businesses. By importing items like sales and supplier payments directly, businesses will no longer need to spend time entering data,” said Mr Reed.

The report from business intelligence provider Datamonitor has found that customer loyalty in financial services is closely tied to the perceived effort of switching bank. This finding comes despite efforts from regulators to make switching easier in an effort to increase competition.

“Barriers to exit in financial services currently have a higher impact on customer retention than factors such as satisfaction. For transaction accounts the effort involved acts as a deterrent to switching, while for mortgages exit fees serve to lock customers’ in” says Petter Ingemarsson, Senior Analyst at Datamonitor and author of the report.

In the mortgage space, exit fees are commonly applicable for customers refinancing within five years. These fees remain a source of controversy and the subject of scrutiny by media and regulators alike. While the government has pledged to put downward pressure on such fees, the banking industry argues that exit fees are necessary to recoup costs associated with a switching mortgage customer.

However, in a 2008 review performed by ASIC, the regulator noted: “As the prevalence and level of early termination fees has grown, some do not appear to be related to the underlying costs they are purporting to recover.” Consumer advocates have argued that exit fees allow lenders to raise rates with impunity as the customer may not afford switching.

The government is in the process of introducing legislation to limit exit fees.

“There is a balance that must be struck when approaching such regulation. On one hand, consumer protection from unfair or deceptive practices should be guaranteed, but on the other hand, overregulation can lower the efficiency of Australia’s well-functioning financial system.  As always, mortgage customers need to closely examine the fine print of contracts and to make a trade-off between features in a way that suits their particular circumstances” concludes Mr Ingemarsson.

Unfortunately, while personal accounts are falling over themselves to up their interest rates, business savings have been somewhat neglected, their rates lagging behind their personal stablemates.

Taking out the prize for best business saver is ING Direct, with a rate of 5.5%. And ING offers a modest 35 points more for your personal saver – at 5.85% – making it one of the more even-handed banks. The only lender we unearthed with equal rates for business and personal savers is Suncorp, however, their equitable approach isn’t going to compensate for their miserly 4.25%.

The current top personal rate belongs to Bankwest, at 6%, yet their business saver slumps to 5.25%. And the biggest difference belongs to St George, who offer a sizable 5.75% for individuals, and an astonishing 3.1% for businesses.

On average, of the lenders we surveyed, there’s around a 1% difference between the rates — which is huge for such small numbers. And more to the point, it’s entirely unjustified. Are the banks earning any less on business savings? Time to have a chat with your branch manager (and don’t forget to bring up those bank fees I blogged about late last year, as we’re still waiting for small business savings there, too).

And stay tuned for Saver Misbehaviour Part II – shonky tricks to trip up small business.

The change in policy is seen as a blatant cash-grab by the company which is already making about $18 million a day in profit.

Westpac has written to all of their credit card customers advising that “interest will also apply to interest charges and fees on your credit-card account”from June.

Choice spokesman Christopher Zinn was critical of the change.

“I think interest on interest is sneaky,” he said last night.

A spokeswoman from Westpac defended the change, arguing that for an average customer with a $3600 balance would only be paying an extra 67c a month in interest.

“We are only bringing our approach into line with industry practice.” She said. “It’s not a huge difference and it’s no different to how any of the other banks do it.”

Countering the claim that this was ‘industry practice’ w spokeswoman for NAB pointed out that while the bank did charge interest on interest, it did not also charge interest on things like late payment fees, as Westpac has announced.

The workshops, valued at $2,500 per participant but free to customers, begin 17 March at 24 locations across Australia. The workshops will be held in local community locations to provide convenient access and networking opportunities to participating businesses.

St.George CEO, Greg Bartlett, said the expanded St.George Business Mentoring Program will offer small business owners practical advice on how to realise the full potential of their business.

“Many small business owners are so focused on the necessary day-to-day operations and functions of their business that they find it very difficult to give proper attention to some of the key ingredients for business success, including forward-planning and strategising, up-skilling and seeking the right advice to improve their business performance,” Mr Bartlett said.

The Business Mentoring Program workshops begin with advice on the steps small business owners can take to structure their business for growth. This workshop is followed over the next eight months with sessions dedicated to business planning, finances, marketing, sales, customer service, team development, systems and business improvement. The workshops are delivered for St.George by international business coaching firm ActionCOACH.

“At St.George, we are committed to partnering with our small business customers to help them achieve their goals. We are delighted to be delivering this added-value service to more than 1,200 businesses across Australia. Our Business Mentoring Program is a fantastic way for small businesses to gain valuable insights in key areas such as planning, sales and marketing, managing employees and customer service,” Mr Bartlett said.

Local St.George Branch Manager and St.George small business experts also attend all of the workshop sessions to answer any questions business customers might have about banking and business finance.

“St.George is committed to meeting the needs of small business customers, through our specialist Business Contact Centre that is now open 24 hours a day, seven days a week, in addition to our 320 branches around Australia,” Mr Bartlett said.

St.George offers a choice of business packages to help customers manage and grow their business, combining day-to-day business bank accounts, merchant facilities, loans for business and business insurance.

‘The Australian Cash Report Q1 2010’ released by financial research company, CoreData, has revealed only a handful of people (13.7 percent) consider deposits held by mutuals to be ‘very secure’, while 13.9 percent consider mutual deposits to be ‘somewhat not secure’.

Only one in eight Australians surveyed consider combined credit unions and building societies to be very secure for their cash deposits. Half of respondents considered the big four banks to be very secure.

While Australian investors felt more comfortable investing with the larger banks during the GFC, one quarter were unaware of the Federal Government’s deposit guarantee and most respondents had only some idea of what it was.

“The guarantee sought to slow the flight of investors towards the big four banks at the expense of the smaller players, but clearly the Government’s move to stabilise the system failed to resonate with consumers with a dramatic effect on competition,” CoreData Principal Andrew Inwood said.

More than one third of investors altered their portfolio weightings to hold more cash during the GFC, with customers willing to change banks to achieve a better rate of return.

“Customers are ready and willing to move banks to find the best rate of return,” Mr Inwood said.

“This trend has led to a great deal of customer turnover for Tier 2 banks as they introduce, then withdraw their promotional rates.

“There is around $508 billion currently being held in cash which investors plan to move into other assets – property and shares being the likely beneficiaries. The interesting question is who’s going to get this money: is it the financial advisers, the banks or the super funds, or will investors cut out the middle man and go direct?” Mr Inwood said.

The research also found Australians have less reliance on bank branches with just 7.8% considering accessibility to be the most important factor and only 3.6% ranking service as the most important.

“Interestingly, our research revealed the once popular phone banking service is now all but dead with the majority of respondents saying they never use it and conversely the use of online bank services is continuing to grow,” Mr Inwood said.

If an SME has had an application for credit refused by a financial institution, they will have a second chance to access credit by appealing to the government.

“If they have been knocked back by their local branch manager then at least they can come to us, set out their case,” said Emerson. “We’ll pass that on to the Australian Bankers’ Association, they will then farm it out to the individual banks and also perform the role of following up. So it won’t be a dead letter.”

The roundtable was arranged due to the increasing number of small businesses being refused finance due to the credit crunch. Emerson says it was important to address this issue to ensure credit flowed to small business, “because small business are big employers”.

People who read this, also liked:
Small business to benefit from Government Investment Allowance
Banks to invest in small businesses
Tax relief for small businesses