The US’ 30 million small and medium businesses (SMB) make up 48% of the private sector, and employ nearly 57 million people. By anyone’s standards, that’s a significant market. Providing excellent service to SMB customers is an opportunity overlooked by the major banks, who have yet to tailor their services to meet the specific needs of this group of hard-working, time-strapped individuals.
By failing to make life easier for small business owners, banks are missing out on building relationships with the lucrative business banking market. Even for existing customers, adding a cross sell capability — to apply for additional credit, for example — would bring with it a significant upside for banks.
The SMB market is diverse, but there are common challenges. The most fundamental challenge is a simple lack of time. The average small business owner in the US works 52 hours a week, significantly more than the national average of 34.4 hours.
In comparison, US banks are only open for about 45 hours per week, and not all banks offer weekend hours. This means that business hours typically do not correlate with those of many of their SMB customers. Access for SMB customers is restricted further still by the fact that bank branches are continuing to disappear from Main Street USA, with about 1600 bank branch closures in 2016 alone.
- Winning The Small Business Banking Market
- Millennial Business Owners Expand Digital Banking Opportunities
Current SMB Banking Support Lacking
Avoka’s 2017 State of Digital Sales in Banking Report found that small business products show the most potential for improvement. In particular, small business accounts continue to lag behind in mobile banking developments. Only a quarter of business banking products can be opened digitally, and small business account opening from mobile devices lag behind those of personal banking accounts.
There has been little progress from last year’s report. Currently, only 9% of loans and checking accounts can be opened from a mobile device, up from a similarly dismal 7% digital opening capability in 2016.
It’s not just the US that lags behind on servicing SMB customers. Avoka’s report found that the lack of attention to the small business banking opportunity was consistent worldwide. This seems madness when SMBs account for nearly half of US and UK revenue (48%). Not to mention that American SMBs account for about one-third of total US goods trade, and are expecting to continue expanding to new markets in the coming years.
Now is the Time to Improve Digital SMB Services
The time is ripe for banks to make their processes and applications more digitally accessible for the small business banking audience. The guiding principle for banks must be to make their services easier to access, easier to understand and easier to navigate. Compare this with the current situation: cumbersome form completion, waiting in lines at physical branch locations with limited business hours, and long friction-filled processes for small business owners to get what they need from their banks.
There are some clear steps which banks can take in order to make their digital business banking work for the small business owner:
- Keep it simple – This is vital for busy business customers. Keep the number of questions on applications to a minimum, and always start with the easiest questions in order to minimize application abandonment. Every time a busy client finds themselves forced to fill in banal and generic information, they edge ever closer to dropping out of the onboarding process. Make sure to minimize those moments.
- Support multiple devices and enable a save and resume functionality – SMB owners often wear many hats from CEO, to accountant, to delivery driver. With so many plates spinning at once, it’s essential that banking processes fit in around other tasks. Offering the option of different devices affords small business owners the luxury of being able to complete tasks on the go at a time most convenient to them.
- Enable a ‘save and resume’ functionality – Providing a ‘save and resume’ functionality means that the SMB customer does not have to sit and do everything in one go, further decreasing abandonment rates.
- Use data to analyse customer onboarding processes – The digital world is constantly evolving. Analyzing data gives banks an invaluable opportunity to continue to improve processes for customers.
- Add a cross sell capability – Allowing SMB customers to apply for additional credit, for example, would provide a significant upside and help to make customers feel valued.
Improving digital capabilities has the potential to be one of the quickest and easiest ways to boost acquisition rates, increase revenues and, most importantly, foster strong relationships with SMB customers. Business banking customers represent a major opportunity for banks … one which they are continuing to jeopardize with low levels of digital capability.
Banks have an invaluable opportunity to be a trusted ally for their SMB customers. But to do that, they need to assure them that they have the capabilities to make life easier for them so that small business owners can get on with what’s important to them – and that’s growing their business.