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TMS30X30 Shares Interesting Insights on Doing Business

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TMS30x30,a fully integrated digital and traditional market research firm, embarked on a research project earlier this year to better understand the businesses situated in the Johannesburg CBD. The goal of the research was to understand the banking and business behaviour of businesses operating in the CBD.

The results showed that businesses in the CBD mostly consist of clothing and accessory shops which are single sector companies, owned by African males. 33% of the businesses have an annual turnover of R60.1k to R120k and 47% are older than 10 years. This emphasises that most of these businesses are established companies which have been in operation for several years but continue to have a low turnover.

Among the interviews conducted, 40% of clients use Absa for business purposes whilst 28% use Standard Bank, 25% FNB and 23% Nedbank. As expected, Capitec is growing their footprint with a 9% usage in this region. FNB and Standard Bank have higher market share in the personal segment whilst Absa and Nedbank are stronger in business banking.

The majority of clients who bank with Absa in their personal capacity also use them as a business bank. A considerable amount of Standard Bank personal clients use FNB for business purposes.

A large percentage of businesses actively separate their business and personal banking to different branches and often to different banks. The reasons for this include wanting to have a business branch close to their business and a personal branch close to home. There also seems to be a belief that certain banks are better at business banking than personal banking.

Most of the clients interviewed were extremely happy with their main business bank and have no major complaints. That being said, 57% of FNB non-clients said they would switch to FNB if the bank were to provide them with affordable products and good service.

“These findings show massive potential for banks to convert their personal clients into main business bank users. It also shows that respondents are satisfied with their current banks but do not hold a high loyalty towards them and would be flexible to consider an alternative institution if a more attractive offer was made,” says Petar Soldo, Director of TMS30X30 South Africa.

Despite the latest attempts to make the CBD safer, 48% of clients still perceive security in the CBD to be an issue and would take their banking business elsewhere due to this concern. There is an opportunity for banks within the CBD to retain business by improving security outside and around the banks.

Security is however less of a concern than was previously estimated and other factors would need to be examined to properly determine the reason for clients not banking within the region of their business locations.

“In general, the CBD market was found to be an untrusting sector of businesses. A considerable portion of these companies are unbanked and focus lies on simple banking methods such as branch, ATM and cash. This will be a difficult market to fully penetrate yet an abundance of opportunity to grow business banking footprints lies in this region,” says Soldo.

In total 349 businesses were approached with 58 interviews completed. Business owners in the CBD were very suspicious and reluctant to speak to the interviewers and complete the survey, which led to 291 businesses refusing to take part in the interviews. There were several reasons for this including the owner not being available, the businesses being unbanked, a language barrier or the respondent simply not being interested.

“The purpose of this research was to better understand the banking and business behavior of businesses operating in the CBD. There were several surprising results from this survey and it highlighted some real opportunities for both local businesses and banks,” concludes Soldo.