Let's Discuss

Self-made businesses innovate. Their bank should too.

As a self-made banking start-up, we face many of the same challenges as other NZ small-medium or self-made businesses. In this piece, we consider the current state New Zealand’s SME banking.
A messy table with coffee, diary, receipt and phone.
Oct 27, 2023

Small businesses, or rather, self-made businesses – a great term recently made popular by Xero are essential to the health of the New Zealand economy, but they often face unique challenges when it comes to banking1. Traditional banks may not always have the flexibility2 needed to support SMEs. As a self-made banking start-up, Debut has experienced some of these challenges firsthand, and we believe that there are several ways in which banking could be improved for SMEs in New Zealand. It all starts with talking to Kiwi business owners and asking the right questions.

What do self-made businesses need? 🤝

Self-made businesses in New Zealand need banking that is affordable, transparent, technologically advanced, personalised, and invested in their success.

Could banks offer SMEs more equitable access to financial services? 💼

Many SMEs find it challenging to contend with high interest rates on loans3. Where interest rates are low, their fledgling businesses may not meet eligibility requirements. These businesses need custom lending solutions tailored to their needs.

MoneyHub has put together a superb guide to small business loans you can check out here.

Not all businesses are the same and New Zealand SMEs (Small-to-Medium Enterprise) in different industries have different needs. According to MYOB4, 41% of self-made businesses have never tried to access finance. Only a quarter of businesses surveyed said that they were always able to secure financing. What’s interesting is that 3% (roughly 16,500 businesses) were unaware they had access to financial support. 

On top of that, New Zealand demographic data shows that about 72% of SME owners are NZ European, while the remaining 28% are made up of people identifying as Indian (8%), Chinese (7%), Māori (6%), Pacific Islander (2%) and other (5%). Māori and Pasifika are currently under-represented proportional to our population size. Likewise, women also represent a disproportionally smaller percentage. Men continue to outnumber women among SME owners 3 to 2, whereas in general, women outnumber men by about 8 to 5. (Stats NZ.)

Could banks offer custom lending solutions for businesses that do not meet the typical criteria?

Could banks offer assistance to new business owners to help correct potential problems and contribute to their success?

How could banks make financial services more accessible and help more wāhine, Māori and Pāsifika start their own businesses?

In all fairness, are SMEs paying too much? 📈

Fees and charges can be a significant burden for self-made businesses, who may not have the resources to navigate complex fee structures. They need transparency and fairness in banking fees. Banks need to be up-front about their fees and charges so that self-made businesses can make informed decisions.

Credit cards and contactless payments are here to stay5, so when faced with fees on every transaction, the only choice for many businesses is to pay the fee6 out of their already thin margins7 or risk upsetting the customer by adding a surcharge8

Further, contactless payments are great for people with low vision or blindness, but interacting with a touch-screen POS terminal poses unique challenges9, meaning surcharge prompts may be missed altogether. 

Could banks be more transparent regarding terms of service?

Could banks charge SMEs fewer fees?

Is there a way banks could reduce or avoid fees altogether and still turn a profit?

Is financial technology keeping pace with modern business demands? 💻

Self-made businesses need access to modern banking technology. Slow adoption of new technology by banks10 makes it difficult for SMEs to stay afloat. SMEs need custom banking solutions, and being at the leading edge of technology is essential for any bank that wants to partner with and help participate in SME success.

How could banks make use of technology to empower SMEs?

When one-size-fits-all doesn’t fit your business. 👩🏽‍💼👨🏻‍💼

Self-made businesses have a variety of diverse and nuanced needs. Is your business run on a shoestring? Do you have a business plan? Do you have a budget? – With unique and sometimes tenuous situations, many self-made businesses could benefit from a more bespoke banking experience. Traditional banks may have an existing and established set of products that are difficult to modify. When these plans are inflexible, it could restrict a self-made business to choose a service that might not be right for them.

Could banking services stretch or scale to adapt to the needs of a business?

What if you could select just the features you needed, a la carte. From payments to lending and even insurance for your small, but growing team?

If you’re an SME owner, let us know your thoughts in the survey.

What does it take to grow a self-made business? 🌟

For roughly every 51,000 new businesses opened in New Zealand annually, about 62,000 close down11. How many SMEs go out of business before they’ve even had a chance to shine? SMEs need a banking partner that is invested in their success. We’re all familiar with the fact that boards and shareholders typically dictate prioritising the bottom line, even at the expense of the customer. SMEs need banks with independence and autonomy, enabling them to cater services or potentially partner with SMEs to help them grow and succeed.

Could a bank offer support and guidance to SMEs that extends beyond banking services?

Debut is committed to building smarter banking that benefits all New Zealanders, including self-made businesses. Help us shape better banking for your business, and let us know what better banking looks like for you.

1 World Bank Group, Doing Business in New Zealand, 2020

2 RNZ, Small businesses told to enhance profitability before asking banks for loans, 2023

3 RNZ, Numbers behind in debt repayments rise to highest level in four years, 2023.

4 MYOB, New Zealand’s SMEs: A snapshot - MYOB Research Analysis, 2022.

5 SmartPay, How Contactless Became NZ’s #1 Payment Method, 2023

6 RNZ, Business tipped to save $105m annually due to reduction in payment fees.

7 RNZ, Small business owners raise prices, but still not taking home pay, 2023

8 SmartPay, Merchant Service Fee Explained, 2023

9 Newshub, Touchscreen EFTPOS terminals creating barrier for blind and low-vision Kiwis, 2023

10 Interest.co.nz, NZ Banks are lagging on real-time payments and fraud protections. The Commerce Commission says it could force them to get on with it., 2023

11 Stats NZ, New Zealand business demography statistics: At February 2021, 2021.

Derrick Olivier is Head of Community and Growth at Debut
Debut is the best way to save, track, budget and understand your money.
We’re doing something that’s never been done in New Zealand. We’re building a bank carefully, thoughtfully and with feedback from our customers. This is only the beginning.
Please note, Debut is not a registered bank under the Banking (Prudential Supervision) Act. This is about our future intentions. Investments with us are not supervised currently by the Reserve Bank of New Zealand.