Hong Kong-based banking giant HSBC has announced it will begin targeting Australian SMEs with turnover between $1-10 million, with a focus on businesses that do business internationally.
While HSBC has previous concentrated on the middle market ($10 million to $200 million in turnover) and corporate ($200 million plus) segments of the Australian banking sector, the company’s local head of commercial banking, Noel McNamara, says the growing global focus of Australian SMEs make the market attractive.
HSBC says 97,000 Australian SMEs do some form of international business, with 14% exporting and 14% doing some form of business with China.
HSBC will also tap into an existing customer base from its high-net-worth Australian business, called HSBC Premiere. It estimates 20% of these customers are also business owners.
Trade finance, foreign exchange and payments and cashflow management products will be a focus for the bank.
“We think there is an enormous opportunity here for us. There is an ever-growing number of companies that are going into Asia,” McNamara says.
“We think we are one of the few, if not the only player, here in the market of the internationals that will actually be targeting this segment.”
While HSBC is known in Australian commercial banking circles for its focus on the top end of town, the company’s global chairman of personal and commercial banking and insurance, Sandy Flockhart, says over three million of the banks 3.6 million customers are SMEs.
However, Flockhart says HSBC is not setting out to go to war with the big banks to try and take a big chunk of the SME market.
“This is not a head-to-head clash with any of the Australian banks,” he said.
“This is an area where we believe we have a competitive advantage in terms of the connectivity with other parts of the world that commercial customers want to transact with.”
McNamara has also questioned whether SME access to finance has been as big a problem as some parts of the SME community have suggested.
He says many SMEs are not actually looking to borrow immediately, but want the comfort that funds will be available at some point in the future.
“We haven’t seen anything to say the industry has taken a substantially different view of the market [through the GFC].”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
