Large institutional investors are increasingly reliant on the personal advice of their colleagues, according to new research released by East & Partners.

 

Traditionally the realm of SMEs and casual traders, word of mouth and colleague advice is now the major source of advice on all trade finance, according to the research.

 

The research shows that the trend begun at the end of 2009, prior to which the major banks were seen as the preeminent source of advice in all things financial, with customers/supplies a distant second and word of mouth in third place.

 

Main Sources of Advice for Trade Finance Customers – 2012
 

 

% of Respondents

 

Institutional

Corporate

SME

Word of Mouth / Colleague Referrals

74.1

91.3

93.0

Customers / Suppliers

65.8

79.1

88.7

Competitor Banks

42.1

15.3

2.3


 

 

% Change Since 2009

 

Institutional

Corporate

SME

Word of Mouth / Colleague Referrals

45.6

19.0

9.3

Customers / Suppliers

48.5

30.5

30.4

Competitor Banks

(30.6)

(53.5)

(58.2)

 

(Source: East & Partners Australian Trade Finance Markets Program)

 

East & Partners said the trend should worry the larger banking institutions as their largest customers begin to seek advice elsewhere.

 

Lachlan Colquhoun, East & Partners Head of Markets Analysis commented, “It should be a major concern to the banks that their largest customers, the institutions, are turning away from them for advice.”



“With trade finance increasingly top of mind, it is natural for institutions to discuss the subject with peers, but the report also highlights some slippage in trust between banks and their largest clients which relationship managers should be aware of, and should address,” Mr Colquhoun added.