Attracting and retaining small business owners can be a difficult task for financial institutions in their quest for customer loyalty.

A new report from ath Power Consulting examines, among other things, small business digital banking usage, offerings, delivery methods, and customer experiences at financial institutions nationwide.

Based on a survey of 441 small business owners (SBOs) conducted during the first quarter of 2017, digital channels have become primary for small business banking customers with two-thirds identifying online banking (52 percent) or mobile banking (14 percent) as their preferred channel. However, branches still play an important role for many SBOs with 28 percent considering them their primary channel, almost double the rate of consumer preference for in-person banking (15 percent).

Interestingly, one-third of SBOs are either “very likely” or “likely” to switch business accounts to another financial institution in the near future. What’s more, two-thirds would consider switching to a competing financial institution if it offered products and services to help them better manage and grow their businesses, and more than half (54 percent) would consider switching to a non-bank alternative in the same scenario. 

“Small business owners do value their relationship with their bank," said Frank Aloi, ath Power founder and CEO. “In fact, in the key area of business mobile transfers, six in 10 would prefer their primary bank to handle such transactions, and over six in 10 (64 percent) would prefer to have their business loans be funded by a traditional bank or credit union. The issue, as revealed in ath Power’s study, is that interaction and advice capabilities are lacking, in addition to subpar business digital offerings. To retain their small business clientele, banks need to offer advanced features designed specifically for business users, while also providing adequate in-person business guidance and expertise when needed.”

Meanwhile, the small business mobile adoption rate is significantly trailing that of consumer banking, with more than twice the amount of consumers preferring mobile over SBOs. 

Despite the fact that more than 80 percent of SBOs say that mobile banking is ‘very important’ or ‘important’ to their business needs, they continue to use online and branch banking at a higher frequency. Many SBOs believe that the small business mobile apps currently available to them are largely undeveloped, with one-third of those citing dissatisfaction saying that mobile functionality is too limited for business use.

Digital capabilities play a significant role in improving SBO efficiency. More than half (55 percent) of SBOs use mobile remote deposit capture (MRDC) for depositing checks for their businesses

“Our study shows that SBOs are leaning more toward the use of technology for day-to-day transactions, but they also desire personal interaction when considering guidance on such topics as business planning, cash flow, and business lending,” added Aloi. “They crave business-specific digital features, but not at the expense of in-person advice. They want both.”

Recent Content