A big chunk of Wayne Swan’s banking reforms are about marketing and advertising campaigns.
For starters, there is the Banking on a Better Deal campaign, which will allow smaller lenders to advertise their products and services with a stamp that says “Government Protected Deposts”.
And then there is a giant community awareness campaign, which will essentially try to get consumers to understand how the banking system works, and exactly what options they will have in this new, hopefully more competitive environment.
It sounds a bit puffy, but it’s actually not a bad idea. Every year we see survey after survey suggesting relatively few consumers shop around for financial products – if the Government can encourage more consumers to engage with their banks, that alone will help increase the competitive tension in the market.
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Now, there isn’t going to be an education campaign for small business owners, but perhaps entrepreneurs should take this reform package as a signal that it’s time to do something about their banking situation.
If you’ve been leaving your banking to the accounts people, why not spend a few days getting involved and finding exactly what type of arrangements you have in place and asking some pointed questions.
What sort of fees are we paying? Are we getting good value for those fees?
What sort of attention are we getting? How responsive is the bank to our needs?
Has the bank taken time to understand our business? If not, why not?
Is our bank offering us alternative lending options, such as equipment finance and factoring? If not, do we need to look at these options from other providers?
How many banks should we be using? It is wise to put all our needs in one basket?
Now, many entrepreneurs will already know the answer to these questions. But if you don’t, it’s time to figure out your situation and see if you can drive a better deal elsewhere.
Maybe you can’t, but this is actually not a bad time to be looking around. With the housing market clearly slowing and the economy recovering, banks will have to start focusing more on the SME sector in the next 12 to 18 months, and competition will be fierce for those businesses that have established track records and are looking to grow.
The point is, the release of the reform package provides a good reminder of how crucial your banking arrangements are, and how important it is that you are constantly reviewing them and looking for a better deal.