Significant Opportunities Exist in Small Business Digital Banking

As small businesses continue to add jobs to the economy at a time when big business is eliminating jobs, it’s little wonder why financial institutions are paying renewed attention to their small business banking customers. They are keenly aware of the potential for expanded relationships and growth opportunities within this important market.

At the same time, today’s time-constrained small business owners (SBOs) are looking for ways to be more efficient and effective in the ways they manage their businesses. Many are looking to their banks and credit unions to offer products and solutions that make their business lives easier and more productive, and for innovative solutions to meet their evolving banking needs. In response to these needs, many of today’s banks and credit unions are developing new online and mobile solutions with small (and mid-sized) businesses in mind.

A major challenge for today’s banks and credit unions is to offer appropriate solutions to meet the disparate needs of micro-businesses and other small businesses that can approach the mid-sized business segment. A common discussion topic posed by banking leaders is identifying precisely what SBOs want from digital engagement and channels solutions, and how they wish to be served. This challenge can also be an opportunity, as existing solutions in the market are typically based on consumer banking platforms, and often fall short in meeting small business needs.

The result is the emergence of small business digital banking, the term many institutions and FinTech partners are using to describe the convergence on online and mobile banking as part of a broader business banking strategy. Digital banking is growing, and is being adopted at financial institutions of all sizes.

Since SBOs often need to access information via both online and mobile banking solutions depending on the task at hand, digital banking solutions need to be able to synchronize data across platforms, as well as to include responsive design elements to enable viewing across devices. To better respond to this important shift, financial institutions are working hard to develop solutions that best meet the needs of all small business banking customers, no matter how, or on which device or computer, they access their account information.

Research from the new ath Power Small Business Digital Banking Study™ also shows that small business owners increasingly lean toward the use of technology for day-to-day transactions, but still desire personal interaction when considering guidance on such topics as cash flow and business lending. In reality, technology and touch need not be mutually exclusive, rather they can be used in harmony to meet the varying needs of today’s small business owners.

Still, digital banking features are top-of-mind for many of today’s SBOs, as they desire 24/7 access and efficient use of one of their most scarce resources – time. And some of these features are following the path of consumer digital banking, with such solutions as mobile remote deposit capture, online account opening, online loan application, and mobile payments piquing the interest of small business owners.

Other ath Power research shows that while SBOs are largely content with their primary financial institution, relatively few are passionate about their banking relationship. Most do not consider their business banking relationship as one that could be termed a trusted advisor.

These customer concerns should be a wake-up call for financial institutions looking to nurture and grow this important line of business, as one-third of SBOs responded that they are very likely or somewhat likely to consider another financial institution in the near future. Enlightened institutions are fully aware of the potential to lose these customers if they aren’t careful, and they also understand that a well-planned and executed digital banking strategy can differentiate their solutions, reduce attrition, deepen relationships, and improve the overall customer experience.

 

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For more information on this topic, please contact the author, Ed O’Brien.  Mr. O’Brien is EVP, Research & Strategy at ath Power Consulting.  He can be reached at eobrien@athpower.com.

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