BANKING: Tailor Made Business Banking
Recent Western Cape Business News
IN a market where businesses are avoiding risk and borrowing is low, Nedbank Business Banking believes its decentralised model enables it to deliver personalised relationship banking based on local knowledge and a deep understanding of the client’s business.
Goolam Kader, divisional executive, Nedbank Business Banking Cape Region Business Unit, explains: “The market is extremely tight and we are not seeing much borrowing by clients and even less risk taking. Business is concentrating on managing daily cash flow and adopting a ‘wait and see’ approach. The effects of the recession are still very visible despite a slight increase in infrastructure construction as a result of government projects. However, there has been a massive downturn in property development and the transfer of property. We have a long way to go before we come out of the recession.
“Nedbank Business Banking’s decentralised model focuses on regionally empowered and accountable business bankers supported by a team of specialists each bringing different skills to the team such as investment, transactional banking, global trade and vehicle and asset finance expertise. Our mantra of ‘know your client’ isn’t lip service; we believe that the bank has to understand the local economy and its industry to know where the needs are and how the cash flow works.”
David McCall, Head: Investment Management adds: “Business conditions here are very different to those in Gauteng for instance. Equally, agricultural conditions in the Western Cape are completely different from agricultural conditions in KwaZulu Natal or Gauteng. Local expertise is therefore crucial in facilitating clients’ needs in the different areas.
“While we are in the business of handling payments and receipts, we also have to manage the client’s liquidity. We need to understand their requirements and objectives today, as well as for the next six months and the next five years.”
McCall believes that while businesses will always keep extra cash in their accounts because they never know exactly when clients are going to pay, it is critical for them to optimise their return on capital. For instance a drop in interest rates makes a significant difference to the income of the business. “Thus businesses need to invest judiciously,” McCall says. “Large corporates have teams of people to manage sophisticated cash flow systems, but this efficiency should not be limited to large corporates. Our business banking clients should be able to do the same. Often clients are too focused on their own industry to think carefully about managing their money. This is where we come in. The global trend is around liquidity management and the concept is that the money you have is worth something and you must ensure that you optimise the return on this money. Clearly the longer you invest, the higher the return, but the investment period will depend on when you need to access that money.
Nedbank is able to offer clients variable access deposits, where for example you are able to get a term interest rate while having access to 20% of the investment. “We customise the product to align with the client’s needs.”
“Provided clients are prepared to become more sophisticated in how they manage their cash, they can create their own working capital profile which will allow them to take more risks in investing for longer. We don’t always have to offer a specific product; we have the flexibility to customise a solution for each client to meet his/her cash flow and interest return requirements,” says McCall.
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