One of the more concerning aspects to come out of the Royal Commission inquiry was that many were worried about an upcoming credit squeeze if banks were forced to make significant changes. Given that the housing market is still on the way down, failure for many to then get access to credit could easily cause a lot of problems.
Aware of this, Commonwealth Bank of Australia (CBA) has said it wants to find ways to make it easier for smaller businesses to feel supported by the bank, as they seek to rebuild bridges and redevelop public trust in their services.
Some of the changes set to be implemented this week include the ability to give a yes or no answer to most funding decisions in just a day, which will help to speed up the process if it gets approved or otherwise.
It will also include more help for businesses who are struggling financially, while several fees are also likely to be waived as they kickstart a process of attracting new customers again.
During the commission, many of the big banks were slammed for a series of internal failures to help out the enterprises they were meant to be servicing, with a culture of sales being pushed instead due to the way most targets were structured. This had seen a relative exodus of business customers who instead went to look at alternative funding sources.
Default interests are expected to be scrapped for farmers who have either been hit by drought or natural disasters, which should prove a big boost to those in rural areas who have suffered significantly over the last couple of years. Droughts in the latter half of this decade have increased in occurrence and severity, and now many farmers are finding it difficult to remain profitable. Such measures from CBA are likely to help in efforts to endear the bank in more remote locations.
The bank has said it lent over $580million each week, which came to a total yearly figure of near $30.2billion. In a statement they said they are ‘committed to supporting business even more’, indicating this figure will either be the same or higher.
In terms of availability of capital funding, their statement discussed ‘rolling out same day decisions on simple business lending so you get them when you need them’, with a cap on the total expected to be $250,000.
Such aims are likely to help assuage any fears of an imminent credit squeeze, which many had been talking about as a very real possibility. Kate Carnell, the small business ombudsman, said recently they are ‘really worried’ about the future availability of credit in Australia, admitting most sources of liquidity had ‘dried up’ for smaller businesses.
It would appear that CBA are also hoping to profit from the chaos seen in some of their rivals, with National Australia Bank (NAB) currently under fire for how they have handled everything since the Hayne report came out earlier this month. The way NAB has been sorting out a change in executive leadership has come in for particular criticism.
CBA CEO Matt Comyn said they were looking to improve their offering for smaller enterprises, calling them ‘the engine room of the Australian economy – when they thrive, we all thrive.’ It seems Australia’s biggest bank is positioning itself to try and get bigger still.