Acquiring and Retaining Small Business Accounts: Time for a Banking Refresh
- Small and "micro" businesses make up nearly 100% of all businesses
- These SMBs find themselves often underserved in the banking zone
- A Deloitte survey says SMBs want banking experiences that compare to retail
Small and micro businesses (SMBs) make up over 99% of all U.S. businesses, but they are a largely underserved segment when it comes to banking. A recent survey by Deloitte of over 500 small businesses reveals that it's time for banks to rethink their small business offerings:
The survey found that SMBs are looking for banking providers that cater to their unique needs. While their product needs may be less complex than larger businesses, there is opportunity for banks to provide more value-added services to support SMBs as they grow.
We recently surveyed 500+ small and micro businesses across the US with annual revenues less than $5M. We sought to understand perspectives from key SMB founders and business leaders around their current experiences with primary and supporting banking providers, and to learn more about their unmet customer needs. The survey covers multiple small business entity types, owners, industries, and geographies, and focuses on banking behaviors, needs, relationships, digital banking preferences, and switching propensity.
The Personal Choice
Crucially, SMB owners choose banks based on their personal banking habits, making early relationships with these customers crucial. Over 80% of respondents said they would consider a digital-only banking provider, indicating the importance of modern, user-friendly digital experiences.
Deloitte's results further reveal that SMB owners want banking experiences similar to their retail experiences, with requirements like strong customer support, security, personalization, and advice. To win in this market, banks need a clear strategy with data-driven segmentation, tailored product offerings, and cutting-edge digital capabilities. You can see Deloittes's entire report here.
So, what services are SMBs using today? Well, the top product/service is a checking account, with 53% of respondents reported having one:
This makes sense; according to the latest AFP report, 91% of business still utilize checks as a payment.
Opportunity for Banks
The small business banking landscape is ripe for disruption. As noted within the report, technology and payment modernization is a key component to continue winning with SMBs:
Designing and building modern digital capabilities via modular, configurable platforms with API-first architecture and associated op and delivery model that enables cost and builds scalability.
This includes modernization of check processing -- where AI technologies have enabled the straight-processing of check payments through any channel preference -- including digital, such as mobile. This technology can be readily available to banks through their core providers or through APIs directly into their systems.
As SMBs' preferences evolve and change, banks need to keep up in order to acquire new accounts AND retain the ones they currently hold.