05 Aug 2020
It’s near impossible for businesses in regions like Far North Queensland (FNQ) to forecast what the next twelve months might looks like, let alone the next five years. Industries not initially impacted by the health consequences of COVID-19 have since discovered no-one is immune from the side effects of the pandemic.
A recent example is the Hass avocado harvest in FNQ where prices have fallen by as much as 40 per cent below previous years. While a variety of factors contributed to the drop, including strong supply from an above average yield, recent lockdowns in other states and the impact this had on local providores undoubtedly played a role. This has also been the case for crops like lemons where the lack of large-scale events here in Australia and globally led to an oversupply without the usual export opportunities.
"Automation and digital technologies will not remove the need to have face-to-face relationships with bankers.”
For those in the retail and tourism industries, uncertainty has become the new norm. Local trade has been strong leading up to the most recent lockdowns but operators are again seeing cancellations as state borders close. While some of these trips may be rebooked, it plays on operators’ minds that a further outbreak might see them miss peak season profits.
Being on top of their financial position has never been more important - businesses need to understand their cash position, assets and liquidity. They also need to understand how their banking is changing, driven by evolving customer expectations and advances in technology.
Banks are increasingly using data to help them automatically approve lending requests. This data can include things like management accounting software, eftpos takings and account behaviours.
Businesses need to be disciplined about managing their accounts to successfully navigate the borrowing process and avoid falling foul of the algorithm. Unarranged excesses, overdrafts that don’t fluctuate or low levels of liquidity could all impact an algorithm which doesn’t know the customer by their name, history or relationship with the bank. It doesn’t mean a business won’t get a loan but the application will involve a manual process that will inevitably take more time.
Automation and digital technologies will not remove the need to have face-to-face relationships with bankers. Businesses with complex needs will still want to deal with someone who can challenge their plans and structure their finances to support current and future needs. Character will also continue to be the most important consideration in customer lending but, for smaller loans, data based on account behaviours that predict character will be the principle driver in decision making.
ANZ has very experienced teams prepared for this new chapter of banking. The banker’s job will always be to tell the story of the customer to the wider organisation - and how well they do this will often determine the longevity of our relationship with the client.
Bankers also have a role to play in sharing some of the science behind auto decisioning algorithms and educating customers about the importance of presenting themselves and their businesses in the best possible light. This data will also allow our bankers to share, for the first time, insights that enable customers to benchmark themselves against competitors and measure their potential for future growth. Leveraging data and insights will also help them better manage their working capital to ensure they are not just profitable but also able to cash-flow their business cycles.
This change is here now and non-traditional banks are competing strongly in this space. For any bank to ignore this is no different to a Kodak ignoring the digital camera. As an old-school banker this may come as a challenge but to resist change is to risk becoming irrelevant.
Artificial intelligence, big data, small data, algorithms and the Cloud are all a bit much for those of us playing in the second-half of our careers but we need to understand their place if we are to provide the right solutions to a generation who expect this will be part of a faster and better customer experience. In a future world, a company’s intellectual property on the delivery of a digital solution may be our only security for lending them money.
It goes without saying you need people to unlock the true value of data. As bankers, our job is to analyse and interpret a business’s data to help customers make more informed decisions.
Jeff Schrale is Regional Executive for Far North Queensland at ANZ
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
05 Aug 2020
09 Jun 2021