St George's relationship management model at risk

A combined Westpac and St George business banking operation would struggle to maintain the level of customer service currently offered by St George, a research report warned yesterday.

St George's strong growth in business banking market share has been based on the deployment of more relationship managers than any of the big four banks, according to a report by East & Partners.

According to East & Partners' customer surveys, 80 per cent of St George's small business customers have a "known" relationship manager, compared to fewer than 20 per cent of Westpac's.

One hundred per cent of St George's middle market and corporate customers had a known relationship manager, while in Westpac's case 70 per cent of middle market customers and around 90 per cent of corporate customers had a known relationship manager.

East & Partners analyst Rob Morgan said there was a strong correlation between the use of relationship managers and customer satisfaction levels in the business banking market.

Corporate customers report that they use relationship managers and product specialists more than any other banking channels, middle market customers use relationship managers and online services most often, and SME customers use online services and relationship managers.

Morgan said: "St George has been able to use its small size to advantage in the business market. It will be a challenge for St George to maintain that ratio of relationship managers to customers across the combined business banking group."

Morgan said Westpac chief executive Gail Kelly would be keen to maintain the high levels of customer satisfaction and the strong growth rates that St George enjoys in business banking, but it would be a challenge to sustain the current level of engagement with the customer.

"Even if she wanted to maintain those ratios and implement them at Westpac it would be difficult to find qualified relationship managers to do it."

East & Partners estimates that the merged bank will have 23 per cent of primary transaction banking relationships in the middle market, ahead of NAB with 21.6 per cent, Commonwealth with 21 per cent and ANZ with 14.8 per cent.

The merged bank will have 22.9 per cent of primary transaction banking relationships in the SME market, behind NAB with 23.3 per cent but ahead of Commonwealth with 18.3 per cent and ANZ with 10.6 per cent.

It will have 23.8 per cent of primary lending relationships in the middle market, behind NAB with 26 per cent but ahead of Commonwealth with 18.6 per cent and ANZ with 13.3 per cent.

And it will have 23.3 per cent of primary lending relationships in the SME market, behind NAB with 29 per cent but ahead of Commonwealth with 15.1 per cent and ANZ with 10.4 per cent.