Asia Transactional Banking Study Detects Power Shift

The past five years has seen the balance of power between bank and client shift back towards the client in Asia, according to East & Partners Asia (E&P Asia).

“Five years ago, at a time when very few corporates were thinking of changing bank, the overwhelming reason for those which did change was improved debt offerings,” comments E&P Asia, in its just-released
‘Asian Institutional Transactional Banking Markets (ATB) Report’
.

“Churn intentions are on the rise and the main reason for changing bank is the need for added value in the relationship.”

The report’s findings draw from interviews with chief financial officers (CFOs) and corporate treasurers of the region’s 1000 largest companies by revenue, across 10 markets excluding Japan.

In November 2009, when only 6.1% of the top 1000 said that a change in primary transaction banker was either “definite” or “highly probable”, 87.5% nominated improved debt offerings and securities as the single largest factor which would influence them to change.

This was far ahead of the second-ranked factor, a lack of added value in the banking relationship, which was cited by only 48.2%. Third was service levels and performance, nominated by 46.4% (the results sum exceed 100% due to multiple responses).

However, by November 2014 the banking landscape had shifted significantly. In this research round, with 24.2% of respondents indicating a change of bank was either “definite” or “highly probable,” the two largest factors influencing a change – both equally cited by 75.8% of the top 1000 – were the lack of added value in the relationship and value for money.

Improved debt offerings, which dominated in 2009, were cited by 70.9%. Value for money, by way of contrast, was a factor for only 35.2% in 2009, so the number seeing this as a factor for churn has more than double in five years.

“Credit conditions are much easier than they were in 2009, bank margins are thinner, and competition for business from new players is intensifying,” said
Lachlan Colquhoun
, chief executive (CEO) of E&P Asia.

“It’s clear that customers are in a much more powerful position than they were, and that is reflected in their much higher expectations across service factors. Back in 2009, we were coming out of the global financial crisis and corporates were sticking with their banks, and were much more reliant on them for credit.”

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