This article was first published in the March 2016 Ireland edition of Accounting and Business magazine.

The subject of banks and lending has been a fraught one over the past few years, with as many strongly held opinions as there are participants with skin in the game. Having served as Bank of Ireland’s managing director for business banking since 2009, Mark Cunningham has a privileged view of the debate, one that has given him a pragmatic perspective. ‘It’s not an argument we are ever going to win, other than continuing to outline the facts,’ he says. ‘Bank of Ireland is a public company with shareholders who have invested in the bank because they think it’s going to grow. Our job is to make a return for them. If we don’t lend or don’t grow, then we can’t do that, so the question is, why would we not be lending?’

Recent figures would seem to support his view. In the first half of 2015, Bank of Ireland lent around €2.5bn to Irish small and medium-sized enterprises (SMEs), an 18% increase on the first half of 2014. Based on Central Bank data, the bank is the dominant player in the market, accounting for more than 50% of lending to SMEs.

Positive though such figures are, they reflect a business community that is still largely in recovery mode rather than pursuing growth. Indeed, Cunningham argues that it is caution among SMEs rather than within the banking sector that is the bigger issue currently. ‘What we are seeing in lending applications at the moment is largely replacement, rather than expansionary, capital expenditure,’ he says. ‘A concern I would have is that some business owners are still looking in the rear-view mirror – we need to help them look forward.’

Unused overdrafts

Cunningham backs up this analysis by citing the level of overdraft utilisation. Having fallen significantly following the financial crisis of 2008, overdraft usage has subsequently failed to recover to the extent that might be expected. ‘These are funding facilities approved for businesses that aren’t being utilised,’ he says. ‘What we see is that people are still scarred and perhaps overly worried about what happened in the past rather than positioning themselves for growth in the next four to five years.’

While accepting there are good reasons for long memories, he argues that now is the time to help businesses to put clear water between past and future. ‘There were no winners after the crash, just survivors. Every business owner went through a phase of wondering if they’d be able to keep their business going. But for the economy to grow and expand, we now need those business owners to be willing to take measured risks. If you look at the interest rate trajectory, at the exchange rate trajectory and at the country’s budgetary trajectory over the next few years, we are probably never going to have a more benign economic backdrop for investment and growth.’


As managing director of business banking, Cunningham oversees Bank of Ireland’s relationship with some 185,000 small business customers. ‘That’s everything from shopkeepers to farmers, and agri-millers to small manufacturers,’ he says. ‘It’s a very broad spectrum and my job is to help manage the range of people who provide our services and facilities. A lot of people think this relationship is only about lending but, in fact, less than half our business customers borrow. However, they all need services of some kind, and our goal is to ensure we are positioned to help them grow.’

With much of the country’s topline growth attributed to multinationals and ambitious start-ups grabbing headlines for the next generation of entrepreneurs, it would be easy to lose sight of the role that established SMEs will play in Ireland’s economic recovery. ‘It’s the businesses in the middle that we need to help and support,’ Cunningham says. ‘Their success is what will really help propel the economy forward. As a bank, we have to be there to assist and facilitate, but we can’t take that risk for them.’

He is particularly proud of the role that Bank of Ireland’s online business portal Think Business plays in this support process. A source of business planning, marketing and cashflow templates, it has attracted more than 200,000 users since its launch and sees about 300 downloads of its templates every week. ‘It is part of an education process designed to ensure owners and managers have a better understanding of the financial aspects of their businesses in the future.’

This more professional approach may also require a deeper look under the bonnet by business owners as their enterprises are retuned. ‘A lot of small businesses in Ireland are undercapitalised. These are small family businesses, not necessarily retaining a lot of the profits in the business. By their nature, they don’t want to bring in any outside equity, so when they are looking to expand, they are looking to the bank. In reality, what we need to have is a bit more equity capital – either from retained earnings or additional equity – going into the business in addition to bank lending.’

Change management

With so much debate dominated by the funding crisis, it’s easy to overlook the other big story of Irish banks this decade – the radical transformation in how they serve their customers.

‘The way customers interact with their banks today, compared to even two years ago, is very different, and the pace of change has surprised everyone.’ Cunningham says. ‘Customers are coming to see the telephone, online and mobile mechanisms as their bank rather than the building in the high street. We have to react to that and be able to provide the services customers want on a 24/7 basis. Where it is going is hard to say, other than that things are evolving really quickly.’

The change management process is complicated by the nature of banking’s business model. ‘Michael O’Leary was able to announce one day that Ryanair was no longer dealing with travel agents, and everyone accepted they would have to book online. But we have to be omni-channel. We need to be able to deal with customers who want to be dealt with at branch-level. Keeping everyone satisfied is always going to be tricky.’

This fast-changing business environment is also likely to play a role in resolving the thorny issue of competition in Ireland’s now heavily rationalised banking sector.

‘If the world was not changing the way it is, then having two to three pillar banks probably wouldn’t be enough,’ Cunningham agrees. ‘But our future competition may not be the other pillar banks but service providers coming into and competing in different segments of the market. Customers in the future may be buying different services from different providers, and in that sense I think there will be plenty of competition, if not in the traditional sense.

‘For Bank of Ireland, our challenge will be to ensure that we are number one or two in every category or product line that we compete in. What’s required in 2017 may be very different from what was required in 2015, so we will have to continue to reinvigorate and reinvent ourselves.’

Giving back

Shortly after graduating from Trinity College Dublin in 1984 with a degree in law, Cunningham’s route to ACCA began when he joined what was then the Investment Bank of Ireland. ‘I was keen to find a job when I got out of college, but I was also looking for a further qualification, so, almost immediately, I began studying ACCA. The idea was that if banking didn’t work out I’d have other options.’

Cunningham has always felt that one of the great strengths of the ACCA Qualification is the international recognition that it enjoys. ‘I have worked in banking in the UK, in fund management in the US and in development projects in Africa. When you are ACCA-qualified, there is an acceptance among others that you understand how finances work, and that has been hugely valuable.’

Working in Sudan with the Irish charity Concern in the late 1980s, Cunningham left behind the comforts of executive life for a position that reflected a long-held belief that there was ‘more to life than study or career’. He recalls ‘some great years that were eye-opening in every sense. You were doing something very different where you got to see tangible results very quickly. It’s extremely rewarding and sometimes you wonder if you are getting more out of it than those you are helping.’

When changing political circumstances saw the charity’s role in the region end, Cunningham decided to come home. He has since played a role as a board member of Concern, and today is on the board of The Ireland Funds, a philanthropic organisation that since its foundation in 1976 has raised over US$500m from the Irish diaspora for worthy projects in Ireland. While Ireland itself has a deserved reputation for charity, Cunningham believes we have some way to go to reach true philanthropy. ‘Charity is instant giving whereas philanthropy is more structured,’ he says. ‘No doubt we will see greater levels of philanthropy in the years ahead. It was beginning to happen before the downturn, but came to a halt when the economy fell off a cliff.’

Turning the tide

Having worked in Bank of Ireland through some of the most difficult years in its long history, Cunningham acknowledges it was a challenging time for all concerned. ‘Lots of people lost lots of money and many businesses were destroyed. Banks weren’t totally to blame but they played their part. There was a lot of anger directed at the sector.’

He believes that the appointment of Richie Boucher as chief executive of the bank in 2009 was extremely significant. ‘He personally acted as a bit of a lightning rod for criticism, and that was hugely cathartic and encouraging for the staff. They saw a leader who was willing to go out and take the flak.’

There was also great pride, he adds, in Bank of Ireland getting back on its feet and being able to repay the state. ‘We could say, yes, we had to take some money, but we’ve given it back – and with a return.’

With the Irish economy rapidly recovering, the clear water between past and future is emerging sooner than even the most optimistic would have forecast a few years ago. There is a feeling in the air of a fresh start, and the Irish banking sector is also rehabilitating its image, positioning itself as a champion of growth and innovation.

So is all forgiven? Or has the Irish public’s relationship with banks changed utterly? Cunningham is again pragmatic. ‘Customers today are demanding. They are looking for a banking partner and provided you give them the services they want, they will be loyal. If you don’t, they’ll look elsewhere.’

Donal Nugent, journalist