Where are the staff?

Banks are making record profits - but are still reducing staff numbers. What impact is this having on small business customers?

Neil Slonim: it's time for banks put on more staff to service customers.

 In the past year NAB has reduced its head count by 1,172, ANZ has cut staff numbers by 727, whilst Westpac has achieved a more modest reduction of 78. CBA, the nation’s biggest and most successful bank, is the only one to have increased employee numbers.

Following Westpac’s record $7.1 billion profit announcement last week, chairman Lindsay Maxsted noted, “we’ve got 35,000 people, some of our systems are outdated, there’s a lot we can still do on costs”. He then went on to say “small business lending is an area we want to get more into."

Recently Lachlan Colquhoun from East & Partners noted “NAB was best positioned to benefit from the pick up in demand for business credit due to its strong business banking franchise."

But there seems to be one question some bank leaders and commentators are underestimating. That is: will there be enough qualified people on the ground to the handle the demand for business credit when it inevitably comes?

Even though demand for business credit has been flat, many business owners still experience lengthy delays in getting decisions made by their banks. Not only is this frustrating but the inability to gain a prompt credit decision often results in the loss of profitable growth opportunities.

The banks have had considerable success in leveraging technology to streamline business processes. One of the aims has been to free up front line staff to spend more time with customers and while it is undeniable technology has improved banker productivity, the pressure to make sales while meeting onerous compliance requirements has not eased.

There are now fewer business bankers being asked to look after more clients. It’s hard for bankers to gain and display a detailed understanding of a client’s business and industry when they have a large number of clients to manage. And as banks remove layers of middle management, many of the wiser older heads have disappeared leaving younger, inexperienced managers vulnerable. This in turn places greater pressure on the credit people who generally want to approve loans but are also motivated to not make a mistake and put their careers in jeopardy.

During lengthy periods of soft demand for business credit, banks tend reduce staffing levels on the assumption that when demand picks up they will be able to readily re-hire. But there is a generational change taking place in banking and this time around it may not be so easy to find good bankers to promptly and efficiently deal with the pick up in demand for business credit which will come at some stage. Technology on its own is not the solution. Business banking remains a peoples business and this is one of the reasons it is so challenging for our banks.

Neil Slonim is an independent expert business banking advisor. He is the founder of theBankDoctor.com.au an online resource centre designed to help SMEs understand, quantify and mitigate their bank risk which he defines as "the risk of the bank not being there for you in your time of need".  Read more: http://www.theage.com.au/small-business/finance/where-are-the-staff-20131113-2xfq6.html#ixzz2r1m80Cr4