AWARD REPORT. Small Business

Transcription

1 2014 AWARD REPORT Small Business

2 August 2014 SMALL BUSINESS IN THIS REPORT The very specialised and diverse nature of small business operations requires a specialised banking response. We are people The entrepreneurial spirit in Australia is alive and well: according to figures released by the Australian Bureau of Statistics (ABS) in June 2014, there are approximately 2.07 million actively trading businesses in Australia and 96% of these businesses are classed as small businesses. These businesses account for nearly half of private sector employment and one-third of production. They form a vital and vibrant part of our economy. Interestingly, they are a vital and vibrant sector with no official definition. There are a number of criteria used by various government bodies legal structure, turnover, number of employees or revenue to define small businesses. Ultimately, though, as noted by Council of Small Business Australia (COSBOA) executive director Peter Strong: We need a definition that picks up on the fact that we are people. That will help regulators and policy designers do a better job. In the lead-up to the G20, which is being hosted in Australia in November this year, it is heartening to see that a central focus of B20 (a forum through which the private sector produces policy recommendations for the annual meeting of the Group of 20 (G20) leaders) this year was firmly on the small business sector. The B20 involves more than 300 business leaders from more than 30 countries working across four taskforces and earlier this month delivered the final B20 policy recommendations to the G20 Presidency through the Prime Minister, Tony Abbott. In the words of COSBOA s Mr Strong: The small business community was mentioned in all the sessions and not just given lip service. We are seen as the way forward and the key to a healthy world economy. And it appears that the health of small businesses is improving. According to business-related personal insolvency statistics released by the Australian Financial Security Authority, personal insolvency was lower for the 12 months to July 2014 than at any point since the commencement of the global financial crisis. Bankrupts entering a business-related bankruptcy (under Parts IV and XI of the Bankruptcy Act 1966) Financial year NSW ACT Vic Qld SA NT WA Tas Total , , , , ,034 1, , ,156 1, , , ,372 1, , , ,437 1, , , , , , ,041 1, , , , , , , , , ,019 1, , , , ,391 Source: AFSA June quarter 2014 business related statistics 1

3 Business loans historical Business loans historical 500 Perhaps correspondingly, it appears that business appetite for borrowing has improved. Billions ($) Even better, this increased borrowing has not caused a decrease in the amount of money held in business deposit accounts Jun-1988 Jan-1989 Aug-1989 Mar-1990 Oct-1990 May-1991 Dec-1991 Jul-1992 Feb-1993 Sep-1993 Apr-1994 Nov-1994 Jun-1995 What does small business need from a financial institution? Jan-1996 Aug-1996 Mar-1997 Oct-1997 May-1998 Dec-1998 Jul-1999 Feb-2000 Sep-2000 Apr-2001 Nov-2001 Jun-2002 Jan-2003 Aug-2003 Mar-2004 Oct-2004 May-2005 Dec-2005 Jul-2006 Feb-2007 Sep-2007 Apr-2008 Nov-2008 Jun-2009 Jan-2010 Aug-2010 Mar-2011 Oct-2011 May-2012 Dec-2012 Jul-2013 Feb-2014 Source: rba.gov.au As Council of Small Business Australia executive director Peter Strong emphasises, the importance of government and service provider recognition that small businesses are run by people can not be overestimated. This individuality of small business means that there is no one size fits all banking solution. Nevertheless, there are some common institutional factors that most businesses will, to a greater or lesser extent, require. In addition to outstanding-value business finance and deposit products, CANSTAR also looks for the following institutional factors in determining the quality of small business relationship offering: Online banking functionality Personalised service is crucial but small businesses also require excellent online banking functionality for sales, purchases and payroll facility. That includes general mobile banking, internet banking (the secure login) and website (the public, unsecure side of the website) functionality, as well as easily accessible small-businessspecific tools and information. Branch coverage While much banking these days is done electronically, there are still important business functions that are best done in a branch. APRA points of presence data and ABS Population data are used to determine the number of branches per person in each state and those with a ratio of one branch to 20,000 of population are given the top score. Merchant services Merchant services refer to the payment terminal used by the business and is the method of accepting card payments. Other business services and advice Small business is a diverse community encompassing businesses across numerous industries and at every stage of life. While all businesses have the common goal of surviving and thriving, each business will require a different path and potentially a different combination of financial products and coaching to get there. Education Small businesses tend to be time-intensive, with most owners being hands-on in the day-to-day operational requirements. This can leave little time for research. Financial institutions can add a great deal of value to their small business clients by the provision of online economic and industry insights, analysis and education tools. It is in the interests of financial institutions for their customers to succeed financially and they can potentially play an important mentorship role. Relationship manager availability Despite the increasing prevalence of online transacting and banking self-service, for many time-poor small business owners the human factor is still an important feature in a good banking relationship. Whether face to face or on the telephone, an availability of well-trained, knowledgeable and productive relationship managers is paramount to the ongoing success of both the small business and the relevant division within a financial institution. 2

4 Pinning our hopes on a number No PIN, no pay is the catch cry, as the acceptance of signatures for most credit cards and debit cards has now been abolished. While there is no change to contactless or online transactions (direct debits and PayWave/Paypass) any other transactions for which you may have previously signed will now require a memorised number instead. Starting with some of the nation s largest merchants, the move will see all of Australia s 800,000 merchant payment terminals undergo a software update to no longer accept signature as the main form of card authorisation for Australian cardholders. Pinwise.com.au A few quick definitions What s a contactless payment? More popularly known as Visa s PayWave and MasterCard s Paypass, the card is held against a reader for at least one second and the payment is processed. Generally, transactions under $100 do not require a PIN, increasing the efficiency of small purchases. Not all retail outlets offer contactless payments; the technology is best suited to high-volume, low-spend outlets such as cafes, fast food outlets, supermarkets and convenience stores. What is a PIN? Your PIN is your personal identification number quite often a four-digit code. It is an identification method that is requested when offering your debit or credit card in-store as your payment method. Rather worryingly, The Guardian reported last year that, while there are around 10,000 possible four-digit PIN combinations, an analysis of 3.4 million four-digit PINs revealed that just two combinations (1234 and 1111) accounted for almost 17% of codes. According to the analysis, straight number patterns, years, keyboard patterns and couplets were all commonly used. No doubt it s because the numbers are easier to remember but that also makes the codes easier to crack! And a chip? Chips are commonplace on all recently-issued cards; they are used as an alternative to the magnetic strip where possible, to reduce the chance of card skimming. Back to PINs what does the switch to predominantly PIN-only payment mean for small businesses? For some, such as restaurants and cafes, it may mean the cost of an increased number of terminals in their store. For others, such as tradespeople who are frequently on location, it may require a new app to potentially turn their smartphone or tablet into a merchant facility. Examples of some apps PayPal Here and Pay at Table PayPal Here is an app and Bluetooth-enabled chip and card reader that turns a smartphone into a payment solution. It supports payment by MasterCard and Visa credit and debit cards (in addition to a PayPal option), while also allowing businesses to generate and distribute invoices and send receipts to customers. PayPal Here costs businesses $139 per unit, with no monthly subscription fee. Instead, a fee is charged for each purchase: 1.95% for credit card payments via the card reader; 2.4% + 30 for invoicing; and 2.9% + 30 for credit cards keyed into the app (without use of the card reader). PayPal s other offering Pay at Table is an extension to its popular mobile application targeted at restaurant owners, which allows PayPal customers to pay their restaurant bills from the convenience of their table. It allows you to order online and pay using the app and then just pick up your order. This can be done from the table or from your desk. Clipp The free ios and Android bar-tab app can be used on multiple devices, which means it s easy to split bills. Users simply enter the amount they want to spend during the night, flash their personal number (provided by the app) at the bar to order drinks and leave like you own the place, according to Clipp s website. It allows customers to pre-set their tab and just flash their phone to order drinks. 3

5 Who offers outstanding value? This year CANSTAR congratulates ANZ on taking the award for Best Value Australia Small Business Bank. ANZ s success is a result of the consistently strong value it offers across all three of the product segments that we compare for the small business award loans, deposits and credit cards as well as strong business banking features, including high business relationship manager numbers. Products Loans The business loans market is highly competitive, with institutions competing fiercely on rate. ANZ offers a competitive suite of loans across both term loans and overdrafts and against both residential and commercial security. ANZ offers the full range of residential and commercial term loans and overdrafts, which provides maximum flexibility for business owners. Best Value Australia Small Business Bank Cards ANZ s business credit cards are a standout feature and at time of writing they offer the lowest published business credit card interest rate of the majors, at 13.76%. Deposits ANZ also wins approval for its deposit accounts, with a full range of business deposit accounts on offer. With competitive interest and importantly competitive fees, there is an account to suit most business styles. ANZ s cash manager account (the Business Premium Saver account) in particular caught CANSTAR s eye, offering a high level of interest (1.75% base rate) and up to five free transactions per month and no monthly account service fee. Institutional factors ANZ has also scored very well on institutional factors. Its branch coverage is impressive and it offers more than 550 relationship managers. ANZ also offers outstanding merchant facility services and a user-friendly online banking system that includes a Small Business Hub with articles, planning templates, research and industry insights. In light of the win, CANSTAR caught up with Kate Gibson, ANZ s General Manager, Small Business Banking Congratulations on the win! Q In your view, what are some of the key opportunities for small businesses in the fast-changing (technology and online sales) business environment? Technology and social media A are fundamentally changing the way consumers access information, products and services this is creating opportunities and challenges for SMEs. Technology-fuelled disruption means competition can come from left field which means businesses need to work smarter to produce high quality goods and services at competitive prices. On the other hand, online shopping and sourcing is opening up markets and opportunities for many businesses outside their local area, even internationally. With great digital marketing, SMEs can reach a much broader potential customer base faster than ever before. And for those companies that have found an opportunity to grow, funding is the best value it has been for many years. A number of years ago, ANZ recognised that the digital landscape was changing the way we all work, so we launched the Banking on with Australia program a $1.5 billion plan to reshape the way we do business. ANZ has worked hard to develop innovative products and services that enable small business owners to access real-time information, process payments on the go and support them in making day-to-day business decisions. You have some great resources in Q your online Small Business Hub. What are the most popular ones? We re pleased to help empower A small businesses by making available a great range of free online education materials, tools and templates for them. Some of the most popular resources are our Cash Flow and Business Planning templates. Blogs and insights from industry experts are also popular, along with our dedicated LinkedIn Group which has approximately 7,000 followers. Is the type of one-on-one Q service that a Small Business Specialist can provide still popular? Absolutely despite the rise A of digital banking, customers still want to meet face to face with their banker to have an in-depth discussion about their financial needs. Our A-Z Review allows our Small Business Specialists to really understand a customer and goes much further than just their assets, liabilities and cash flows. We think it is critical we understand a customer s past, their aspirations and the market they compete in. We are proud to have built a national network of Small Business Specialists in ANZ branches, and Business Banking Managers in dedicated ANZ Business Centres across Australia. Many of our specialists have been in a small business themselves, so truly understand the needs of our small business customers. 4

6 SMALL BUSINESS AWARD METHODOLOGY What are the CANSTAR Business Banking Star Ratings? CANSTAR Business Banking Star Ratings use a sophisticated rating methodology, unique to CANSTAR, which compares the dominant business banking products in Australia. The ratings are aimed at small businesses of varying sizes, with profiles and loan sizes to suit. The specific loan and deposit values are outlined below, and range up to $500,000. The results are reflected in a consumer-friendly five-star concept. The star ratings from the CANSTAR Business Banking Star Ratings go from a rising star through to a five-star product signifying outstanding value. Rising Stars are allocated to those products that would be rated five-star but have not been in the market for more than six months. Rising Star products will be formally rated in the next rating period once more historical data is available for the applicable product area. The three business banking products that are given star ratings include: 1. Business loans 2. Business deposits 3. Business credit cards What is the CANSTAR Best Value Australia Small Business Bank award? In conjunction with the Business Banking Star Ratings, CANSTAR Best Value Australia Small Business Bank is awarded to the institution that provides the best combination of products across the Business Banking Star Ratings profiles, as well as excelling in a range of institutional factors. The award aims to give recognition to the institution that backs up quality products with great service to small businesses. Institutional factors that were considered include: Branch coverage Relationship manager availability Online banking functionality Merchant services Other business services and advice The breakdown of weighting for each category is displayed in the following methodology tree. 5

7 Small Business Bank Award Methodology tree Loans 60% Term loans Residential (80%) and Commercial (20%) 60% Overdraft Residential (80%) and Commercial (20%) 40% Products Institution s business banking products 70% Revolver Credit 40% cards 20% Transactor 60% Online Saver Deposit profile 20% Deposit accounts 20% Cash Manager Deposit profile 10% High Transactor Deposit profile 35% Low Transactor Deposit profile 35% Business banking 40% Institutional factors Institution s business banking capabilities 30% Relationship manager and support services 30% Other business services and advice 20% Education 10% 6

8 Institutional factors Institutional factors Weighting Business banking 40% Branch coverage 50% Online banking functionality 25% Payment services 25% Relationship manager and support services 30% Relationship manager coverage 85% Support services 15% Other business services and advice 20% Start-ups 10% Risk management 25% Small business packages 30% Equipment finance 25% Disaster relief and support 10% Education 10% Institutional factors Weighting Online banking functionality 25% Transaction history 25% Payroll 25% Payments 15% Security limits 15% Self service 20% Business Loan Star Ratings To arrive at the total score, CANSTAR applies a weight (w) against the Pricing (P) and Features (F). This weight will vary for each product category and will reflect the relative importance of either costs or features in determining the best business loan. This method can be summarised as: TOTAL SCORE ( T ) = PRICING ( P ) + FEATURES SCORE ( F ) Refer to TABLE 1 Refer to TABLE 1 Pricing Based on AAPR 40-50% Features Based on 11 different feature categories 50-60% Average customer margin total cost 50% Scenario % Scenarios 50% Scenario % Scenario % 7

9 Residential and commercial-secured term loans and overdrafts were eligible to be considered in the Business Loan Star Ratings. CANSTAR understands that businesses use different forms of security. We also understand that some businesses require a one-time loan while others require access to a revolving line of credit. CANSTAR has separated the Business Loan Star Ratings into the four categories listed in TABLE 1 in recognition of these differences. TABLE 1 also highlights the contribution of the pricing and features value components for each of the four categories. TABLE 1 Business Loan Star Ratings components Product category Pricing Features Residential secured term loans 50% 50% Commercial secured term loans 50% 50% Residential secured overdrafts 40% 60% Commercial secured overdrafts 40% 60% Pricing component The purpose of the Business Loan Star Ratings is to determine which products are best suited for a broad cross-section of business loan users. Because of this general focus, CANSTAR calculated the total cost for each product using a combination of the base rate, customer margins supplied by institutions, upfront and ongoing fees on two different loan amounts and also for three different business scenarios (see TABLE 2). The product with the lowest average total cost is then awarded the highest pricing score for the product category to which it belongs. TABLE 2 Residential property security Commercial property security Term loan Overdraft Term loan Overdraft Loan calculation term 10 years 10 years 5 years 5 years Amount 1 $250,000 (50%) $50,000 (50%) $250,000 (50%) $50,000 (50%) Amount 2 $500,000 (50%) $125,000 (50%) $500,000 (50%) $125,000 (50%) The overdraft pricing calculation is based on a 50% utilisation of the facility. 8

10 Features component More than 100 individual features of each loan and overdraft is scored for positive traits and awarded a Features score. TABLE 3, below, highlights the contribution of the various groups of information to award the business loan Features score. TABLE 3 Business loan feature weights Feature category Term loans Overdrafts Lending terms 25% 20% Security accepted 5% 5% Redraw facility 15% - Relationship bonus 10% - Lending area 5% 5% Portability 5% 5% Loan purposes availability 10% 10% Repayment capabilities 10% - Split facility 5% - Switching facility 5% - Overdraft terms - 50%* Online security 5% 5% *Overdraft terms takes the linked accounts score from the Business Transaction Account Star Ratings with a weighting of 50% High and 50% Low Transactor. Business Deposit Account Star Ratings To arrive at the total score, CANSTAR applies a weight (w) against the P and F. This weight will vary for each profile and will reflect the relative importance of either costs or features in determining the best value business deposit account. This method can be summarised as: TOTAL SCORE ( T ) = PRICING ( P ) + FEATURES SCORE ( F ) Pricing score 60-75% Rates Historical rates and current rate calculation 10-80% Scenario fees Customer transaction scenario 20-90% Branch locations Across Australia 20% Features score 25-40% Product features Across three categories 80% Indexed Score Product with the best pricing or features will receive a full score 9

11 All cash management accounts, transaction accounts and internet accounts specifically marketed to small businesses are eligible to be included in the Business Deposit Account Star Ratings. Profile Pricing score Features score Low Transactor 60% 40% High Transactor 60% 40% Cash Manager 60% 40% Online Saver 75% 25% Pricing score The pricing score of the business deposits is broken down into two components; Rates and Fees. The weighting of each component to the customer profile differs and the weightings we apply are displayed in the table below. Rate Profile Scenario Rate Low Transactor 90% 10% High Transactor 90% 10% Cash Manager 40% 60% Online Saver* 20% 80% *Online Saver requires an interest rate of at least 1% at $50k Interest paid on business savings accounts is an important component of the business saver profiles. The average interest rate paid across three nominated account balances is used to establish the account that pays the highest overall interest. The product found to pay the highest average rate based on the weightings in the table below receives the highest Rate score. Historical rate balances Balances Low Transactor High Transactor Cash Manager Online Saver Balance 1 $1,000 $5,000 $10,000 $10,000 Balance 2 $5,000 $10,000 $50,000 $50,000 Balance 3 $10,000 $20,000 $100,000 $250,000 Balances weightings The historical balances have a different level of importance to the profiles. The historical rates score is calculated using the percentages below. Balances Business Cash Manager Other profiles Balance 1 25% 35% Balance 2 40% 35% Balance 3 35% 30% The rates component of the pricing score is broken down into two components for the Online Saver profile only. The additional component is an 18-month interest calculation that includes promotional rates where applicable. Both subcomponents are weighted equally for the online saver profile. Rates (Online Saver profile only) 18-month total interest calculation 50% Six-month historical average total rate 50% 10

12 Total interest calculation Due to the popularity of promotional rates on online savers and the varying nature of the offers in the market, an 18- month interest calculation was added to the ratings to differentiate these offerings. The simple interest calculation is based on the interest earned on a $50,000 deposit over 18 months taking into account the promotional rate and length and the base interest rate. Fees transaction scenario The scenario analysis is conducted using CANSTAR s unique transaction calculator, which prices the transaction behaviour of 500 customer scenarios. The calculation incorporates transaction fees, fee rebates and free transaction limits. The product with the lowest overall cost for the 500 customer scenarios receives the highest Scenario score. Transaction fee scenarios Low Transactor High Transactor Cash Manager Online Saver Average minimum balance $5,000 $10,000 $50,000 $50,000 Monthly deposit $20,000 $100,000 $0 $0 Average no. of transactions/ month Internet transaction 35% 30% 30% 100% Branch cash withdrawal 5% 5% 5% - Branch cash deposit 7% 10% 5% - Cheque withdrawal 5% 5% 7% - Cheque deposit 5% 5% 8% - Direct credit 22% 27% 25% - Direct debit 8% 8% 5% - ATM 5% 5% 5% - eftpos 8% 5% 10% - Features More than 100 individual features of each account are scored for positive traits and awarded a features score. The table highlights the contribution of the various groups of information to award the business deposit accounts a features score. Feature component General features -Reporting options: passbook statement, internet, -Access channels: ATM, eftpos, phone, internet, cheque -Facilities: offset, overdraft, sweep, periodic payment Specific conditions -Interest details: calculations and payment frequency, balance used - Open/closed/min/max, entire/portion, bonus interest -Minimum: opening/subsequent deposit, ongoing balance, w/d -Maximum withdrawals per d/w: ATM, eftpos, combined Internet security and online functionality -Secondary authentication: security, higher transfer limit available with secondary authentication -Online banking functionality such as file export to accounting package, individual limits and 2 to sign functionality Transactor Cash Manager Online Saver 65% 50% 30% 20% 35% 50% 15% 15% 20% 11

13 Branch coverage While most banking these days is done electronically there are still important business functions that can only be solved by the presence of a branch, e.g. cash deposits and product application. APRA points of presence data and ABS Population data are used to determine the number of branches per person in each state. The institution s top state is taken into account and those with a ratio of one branch to 30,000 of population are given the top score and the remainder indexed of this mark. Business Credit Card Star Ratings To arrive at the total score, CANSTAR applies a weight (w) against the P and F. This weight will vary for each customer behaviour profile and will reflect the relative importance of either costs or features in determining the best business credit card. This method can be summarised as: TOTAL SCORE ( T ) = PRICING ( P ) + FEATURES SCORE ( F ) Pricing score 20-80% Cost over 12 months Includes current interest and annual fee Six-month historical interest rate (Revolver profile only) Features score 20-80% Features e.g. rewards, free days, specific business conditions Indexed Score Product with the best pricing or features will receive a full score Unsecured business credit and charge cards are eligible to be included in the Business Credit Card Star Ratings. All eligible cards are assessed against two distinct business consumer behaviour profiles (Revolver and Transactor). Revolvers carry an outstanding balance on their card while Transactors pay off their outstanding balance each month. As charge cards do not encourage revolving, they were only eligible to be assessed against the Transactor profile. The star ratings consider Pricing and Features to be the two components in the card user s value equation. The contribution of each of these components to the value proposition for the Business Revolver and the Business Transactor are explained in the table below. Business Credit Card Star Ratings components Profile Pricing score Features score Business Revolver 80% 20% Business Transactor 20% 80% 12

14 Pricing score The pricing score for the Revolver profile is based on a six-month average historical interest rate and the current cost of revolving $5,000. Ninety per cent of the revolve amount is based on the purchase rate, with the remaining 10% based on the cash advance rate. For the Revolver profile the cost score and the six-month historical score are weighted evenly. The pricing score for the Transactor profile is based on the annual cost of keeping the card active. Cards that do not charge an ongoing fee automatically receive the maximum pricing score while other cards are awarded a score based on their annualised fees. Features score More than 100 individual features of each card are scored for positive traits and awarded a Features score. The table below highlights the contribution of the various groups of information to award the business credit/charge card Features score. Features components Revolver Transactor Specific business card conditions 20% 20% Merchant acceptability 15% 5% Premium card facilities 15% 10% Online transactions 15% 10% General card terms 5% 5% Fees and charges 10% 5% Late payment/interest charged 5% 5% Repayment capabilities 5% 5% Rewards 10% 25% Free days 0% 10% Total 100% 100% 13

15 Rewards The rewards component of both profiles is made up of the best score from the frequent flyer or cash rewards methodologies. This score is combined with a choice score that looks at if cash, merchandise, frequent flyer and shopping vouchers are available. Where companion American Express /MasterCard/Visa programs exist the weighted score is used based on 60% Visa/MasterCard and 40% American Express Program score 90% Cash rewards score Frequent flyer score Rewards score 10-20% Rewards types Cash rewards Choice score 10% Frequent flyer Merchandise rewards Shopping vouchers The rewards feature score is calculated based on the level of return as well as specific features relating to the programs. The methodologies used are in the trees below. 14

16 Frequent flyer methodology Annual fee Annual cost of obtaining a rewards program Pricing score 90% Flight scenarios Based on portion of six representative flight routes redeemed through two annual spending levels Frequent flyer Feature score 10% Reward features Based on nine feature categories Price score The pricing score is calculated using the score for two components: annual fee and flight scenarios. The weighting for both components are distributed as follow: Price category Annual fee Flight scenario $60K spend 40% 60% $120K spend 20% 80% Annual fee The annual fee is the sum of the card s annual fee and any additional rewards or frequent flyer program fees. Flight scenarios This looks at the portion of the flight earned in a year based on $60K and $120K spend levels. Free flights are awarded in the flight scenarios calculations when offered without additional purchase or conditions. There are six scenarios three domestic and three international: Sydney - Melbourne Flight scenarios Sydney - Brisbane Sydney - Perth Sydney - London Sydney - LA Sydney - Hong Kong Domestic 50% International 50% 15

17 Reward feature categories Each reward feature is categorised into nine different categories and allocated points. The total feature score for each category (e.g. earning policies) is ranked and weighted with each category contributing to the overall features score. Feature category Feature weight Earning policies 15% Frequent flyer conditions 15% Frequent flyer partners 10% Instant rewards information 10% Travel rewards 15% Customer service information 10% Top-up policies 10% Account status information 5% Point expiration policies 10% Cash/shopping voucher rewards methodology Cash rewards score Pricing score 80% Feature score 20% Net Reward Return 100% Net return (dollar value of cash back/shopping vouchers card cost) based on specific spend levels Feature category Weight (%) Earning policies 30 Points capping information 20 Instant rewards information 20 Bonus points partners 15 Account status information 10 Points expiration 5 Total

18 How are the stars awarded? Each business banking product reviewed for the CANSTAR Business Banking Star Ratings is awarded points for its comparative pricing and for the array of positive features attached to the account. Points are aggregated to achieve a Pricing score (P) and a Features score (F). The total score received for each profile ranks the products. The stars are then awarded based on the distribution of the scores, with the objective to award the top 5-10% of products with the CANSTAR five-star rating. The results are reflected in a consumer-friendly CANSTAR star rating concept, with five stars denoting outstanding value. How many products and financial institutions are analysed? In order to calculate the ratings, CANSTAR analyses 41 term loans, 46 overdrafts, 32 credit cards and 93 deposit accounts from leading financial institutions in Australia. How often is the CANSTAR Best Value Australia Small Business Bank re-rated? All ratings are fully recalculated every 12 months based on the latest features offered by each institution. CANSTAR also monitors rate changes on an ongoing basis. Does CANSTAR rate other product areas? CANSTAR researches, compares and rates the suite of banking and insurance products listed below. These star ratings use similar methodologies to guarantee quality, consistency and transparency. Results are freely available to consumers who use the star ratings as a guide to product excellence. The use of similar star ratings logos also builds consumer recognition of quality products across all categories. Please access the CANSTAR website at if you would like to view the latest star ratings reports of interest. Account based pensions Agribusiness Business banking Business life insurance Car insurance Credit cards Deposit accounts Direct life insurance First home buyer Health insurance Home & Contents Home loans Life insurance Managed investments Margin lending Online banking Online share trading Package banking Personal loans Reward programs Superannuation Term deposits Travel insurance Travel money card Youth banking 17

19 DISCLAIMER: To the extent that the information in this report constitutes general advice, this advice has been prepared by CANSTAR Research Pty Ltd A.C.N AFSL and ACL ( CANSTAR ). The information has been prepared without taking into account your individual investment objectives, financial circumstances or needs. Before you decide whether or not to acquire a particular financial product you should assess whether it is appropriate for you in the light of your own personal circumstances, having regard to your own objectives, financial situation and needs. You may wish to obtain financial advice from a suitably qualified adviser before making any decision to acquire a financial product. CANSTAR provides information about credit products. It is not a credit provider and in giving you information it is not making any suggestion or recommendation to you about a particular credit product. Please refer to CANSTAR s FSG for more information. The information in this report must not be copied or otherwise reproduced, repackaged, further transmitted, transferred, disseminated, redistributed or resold, or stored for subsequent use for any purpose, in whole or in part, in any form or manner or by means whatsoever, by any person without CANSTAR s prior written consent. All information obtained by CANSTAR from external sources is believed to be accurate and reliable. Under no circumstances shall CANSTAR have any liability to any person or entity due to error (negligence or otherwise) or other circumstances or contingency within or outside the control of CANSTAR or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication, or delivery of any such information. Copyright 2014 CANSTAR Research Pty Ltd A.C.N The word CANSTAR, the gold star in a circle logo (with or without surmounting stars), are trademarks or registered trademarks of CANSTAR Pty Ltd. Reference to third party products, services or other information by trade name, trademark or otherwise does not constitute or imply endorsement, sponsorship or recommendation of CANSTAR by the respective trademark owner. 18