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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Suitability

What does suitability mean when a bank sells a product?

ONE OF 80 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

Suitability is the duty to offer a customer a product that fits their needs, circumstances and understanding, rather than the one that pays the bank most or clears a target. For a business borrower it is the difference between a fixed rate explained with its break cost and a fixed rate sold because the quarter is short; for a hedging product it is whether the customer can carry the downside if the market moves the other way. It is tested over the life of the product, not only at the sale — a product that fitted when it was sold and no longer does is a conversation the bank owes.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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