There are changes afoot with the way the Big 4 Banks treat lending and customer relations. The Royal Commission into banking practices is uncovering a level of disregard for the customer and circumstances that has forced many small to medium businesses to the wall in recent years. A recent comment I read summed it up…”The Banks will lend you an Umbrella when it’s sunny, then want it back when it’s raining.”

But is it all their fault?

I started my career in banking with one of the big 4 and I had a decade in the industry before moving out into the private property development sector. One of the greatest hurdles I faced was my mind set. In banking the approach you take is, how can this deal or project I am assessing go wrong and how do we mitigate that risk. That is compared to the private sector which is focused on how do I make this project work, identify the risks and come up with solutions.

In defence of the big 4 they are strictly controlled by APRA and the levels of exposure they can have to certain sectors under certain conditions, and that regulation is warranted. It is one of the reasons our banking system didn’t collapse during the GFC.

But more importantly the banks (like any major institutions) are controlled by shareholders, share price, and dividends. Again this is not a bad thing and shareholders are obviously critical to an organisations’ success and deserve to be rewarded. It however does produce a culture of maximisation of annualised returns and a complete focus on the bottom line, rather than a more collaborative approach with clients. The need to build strong relationships with customers seems to have gone by the wayside.

A partnership approach rather than an adversarial approach would, I believe, provide significantly better outcomes for financiers and borrowers, but that would mean a cultural shift from where we are now.

The Big 4 Banks