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Banking on homegrown businesses

New technologies are changing the way we interact with our banks and it won’t be long before banks can predict the needs of small businesses. Newsroom’s Andrew Patterson talks to Kiwibank about the looming opportunities to transform business banking.

When Gary Rohloff, founder of home-grown business Laybuy, found out he needed a $10 million lending facility in a hurry he called his bank.

It was November 2017, and while the business was growing fast, it was still finding its feet so there was an element of risk involved.

“We only gave Kiwibank a fortnight’s notice and they came through for us. That really impressed me, particularly given my own background is in banking and finance. What we were doing at the time was very new, so they were certainly taking a risk. But they backed us at a critical point in our journey and I’ve never forgotten that.”

Layby, which listed on the Australian Stock Exchange this month, has grown significantly since those early days. Had that $10 million facility not been approved when it was needed the outcome might have been very different.

Hamish White, founder and CEO of Napier based internet service provider NOW NZ freely admits when he joined Kiwibank in 2016, there wasn’t a lot to bank on.

“We were effectively a good annuity business with recurring annual revenues, but we didn’t have a lot in terms of physical assets. But Kiwibank definitely brought a fresh perspective to the banking relationship which I really appreciated compared to the Australian owners of our previous bank who had certainly constrained us.”

He was also surprised when Kiwibank chief executive Steve Jurkovich phoned him earlier this year.

“Initially my heart sank when he said who he was. I thought he was about to deliver some bad news, but he was calling to congratulate us on winning a major business award for customer satisfaction. I was blown away he would take the time to do that for a small business like ours.”

Quentin Quin, chief customer officer for business, says both businesses are good examples of what Kiwibank does best, which is build relationships.

“There is no one generic answer or solution. Each customer’s requirements are different and so we ask, how can Kiwibank support and tailor a banking solution that best allows that customer to grow, to prosper, or optimise?”

“Often we hear feedback from businesses that they don’t know who to speak to within the banking institution they’re dealing with. That is where we are striving to be different. We’ve got the agility and ability to go the extra mile for customers, whether that’s via our dedicated small business team, or via our relationship managers spread across the country.” 

In 2022, Kiwibank will celebrate its 20th anniversary and in those two decades it has become well known for its range of personal banking services. More recently, the bank has been quietly growing a presence in business banking. Catering primarily to small and medium businesses which, as is well known, provide the backbone of New Zealand’s economy, Kiwibank is focused on lifting its current two percent share of the business banking market.

Quin says he isn’t put off by the challenge of growing its slice of the pie from a small base.

“Before joining Kiwibank, I was fortunate to spend time working for the World Bank in several developing countries as well as a period at NZ Trade & Enterprise. It ignited some real enthusiasm about the critical role small businesses play in growing economies. As I see it, our job is to provide them with commercial solutions to make that growth happen.”

So, when the opportunity presented itself for Quin to combine his career experiences at both organisations by joining Kiwibank he says it was an easy decision.

“I have always maintained that Kiwibank is the jewel in the crown in terms of Government-owned assets. For me the timing of this opportunity means I can play a really meaningful role in supporting New Zealand owned businesses at crucial time.”

It’s a well-known fact that New Zealand has a high concentration of small and medium-sized businesses, or SMEs as they are often called. According to MBIE, around 97 percent of domestic businesses employ fewer than 20 people, and while being small and nimble can have advantages, it doesn’t usually give you much clout when it comes to banking relationships.

“Often we hear feedback from businesses that they don’t know who to speak to within the banking institution they’re dealing with. That is where we are striving to be different. We’ve got the agility and ability to go the extra mile for customers, whether that’s via our dedicated small business team, or via our relationship managers spread across the country.” 

Technology offers myriad opportunities to transform business banking. In the same way that personal banking is largely all conducted online these days with little need to stand in queues at local branches, business banking is quickly moving in a similar direction.

The adoption of cloud-based accounting packages from the likes of Xero and MYOB has meant New Zealand now has one of the highest percentages of businesses in the world completing their accounts online.

Quin says this provides a real opportunity for Kiwibank to streamline many of its processes by using a technology solution where possible.

“Recent advances in artificial intelligence are rapidly changing the face of business banking by creating much more efficient online digital capability. At some point in the near future I will be able to call a customer and tell them I’ve just extended their overdraft or some other lending facility without them having to call me first because the AI algorithm will be monitoring their key financial data in real time. Equally, we can be aware of issues early that we can then help the business to resolve.”

This relationship between the bank and the business can create a new level of working together that is both proactive and responsive.

“We recognise the fact that many business owners get home at night and sometime around 9pm they might start working on their cashflow projections, if they have the energy. If we can fulfill our role of proactively managing the banking relationship between ourselves and our customers, I know they’re going to be very grateful for that.”

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