Small business banking costs in the spotlight
Latest research from the University of Waikato’s Management School shows that four out of five small businesses might be paying more in banking costs than they need to.
The research, conducted by Dr Stuart Locke, covers all financial services that New Zealand commercial banks offer, and tries to rationalise a small business’ choice in bank, looking at cost efficiency and services.
Small business banking in New Zealand is dominated by five banks: ASB, ANZ, BNZ, National Bank and Westpac.
“Our findings show small businesses could save more than $1,000 a year if they pick the right bank,” says Dr Locke. The effects on small and medium enterprises (SMEs) because of this market concentration are under development in the SME sector and in regional development.
The conclusions were based on a simulation model – comparing costs of the five major banks by creating five typical banking transaction scenarios.
“Our simulation model provides a much quicker way to analyse banking fees. It could be a useful tool for small business advisors and accountants, who can be held accountable for any advice they give,” says Dr Locke.
The research team concluded that there isn’t much information out there for the public in getting the best advice on banking deals. It was estimated it would take SMEs three days to compare banks and determine findings like these.