What Gen X Business Owners Want From Their Banking Providers

The forgotten consumer demographic segment and the central commercial segment for many financial institutions large and small share many attitudes and pain points about banking. Indeed, there's convergence between the ownership and management of small and medium-sized businesses and Generation Xers. New research spotlights how banks and credit unions can increase penetration in both markets.

Generation X has it tough. A much smaller demographic than Boomers and Millennials, it’s often given short shrift by financial institutions.

In fact, banks and credit unions serving small and midsize businesses should want to learn what makes Gen Xers unique— and what they want from a banking relationship. It turns out that SMBs and Gen Xers have a great deal in common.

That’s a key insight from the FIS 2019 Performance Against Customer Expectations (PACE) study, which canvassed nearly 600 U.S. small and midsize businesses (SMBs)and nearly 1,750 U.S. consumers.

“Understanding shared SMB and Gen X behaviors and preferences can position your institution to serve both markets better.”

Understanding shared SMB and Gen X behaviors and preferences can position your institution to serve both markets better — and help drive the success of your commercial and consumer banking operations alike.

Uncanny Parallels between Gen Xers and Small and Medium Businesses

SMBs are companies with annual revenues spanning $500,000 to $500 million. Gen Xers are consumers age 38 – 52. The two groups would seem to be apples and oranges — actually, not even the same aisle in the store. However, their similarities are remarkable:

Maturity sweet spot—The average age of an SMB owner is 50, according to Experian. The mean age of a Gen Xer is 45. And Gen Xers are now the highest-earning demographic, with 24% of household incomes topping $150,000.

DIY tendencies— Gen Xers say they need little assistance managing finances. In fact, 41% say that they receive no financial advice at all. SMBs owners, meanwhile, are the ultimate do-it-yourselfers.

Price sensitivity— Accoding to the PACE study, more than one-third of SMBs that changed financial institution did so to find lower fees, the top reason for switching. Meanwhile, 61% of Gen Xers who switched providers did so for a better interest rate or offer. And 57% would consider swithcing to a direct bank for a higher rate.

Spread of wallet— Both Gen X and SMBs rely on multiple financial institutions: 59% of SMBs use more than one banking institution, as do 52% of Gen Xers — who have the most accounts and use the most bank products compared with other demographics.

Bank trust— Just over one-half of Gen Xers say that they trust banking players more than nonbanks. Similarly, 54% of SMBs trust banking institutions over nonbanks for financial mobile apps, and nearly two-thirds say they’re very satisfied with the trustworthiness of their primary financial institution.

Frictionless experiences— For both SMBs and Gen Xers, a frictionless banking experience is an imperative. In fact, the frictionless attribute is a top-three financial institution trait for SMBs, 62% of which say it’s “very” important. On the consumer side, 75% of Gen Xers say the same.

Shared pain— Both SMB owners and Gen Xers value their time. In fact, needing to find time to visit the bank branch is the top financial pain point for both groups.

Digital desires— Online and mobile banking are the most popular ways for both SMBs and Gen Xers to interact with banks. Among SMBs, 90% say they use online channels and 61% say they used mobile channels in the past month. For Gen Xers, the numbers were 65% online and 67% mobile.

Future focus— Businesses and consumers naturally have some distinct banking needs. But both foresee similar futures. The most desired future feature is technology that lowers fees, at a rate of 52% for SMBs and 57% for Gen Xers. The next most sought-after capability is biometric security like facial recognition, at 43% for SMBs and 37% for Gen Xers.

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Better Understanding Drives Better Customer Relationships

The SMB-Gen X parallels might come as a surprise, but they really shouldn’t. After all, consumer-grade experiences increasingly pervade our work lives. And business executives and owners now want the same access and ease of use they get in their personal lives.

The takeaway? Both SMBs and Gen Xers are revenue drivers for financial institutions. Capitalize on your trust advantage over fintechs — but cement relationships to avoid losing wallet share.

Start by responding to preferences such as price sensitivity. Then, deliver the targeted, personalized services they want. Show that you value their business by providing ime-saving features and processes.

Continue to enhance and promote your mobile capabilities. And stay in front of digital demands — or risk falling behind your competition. But don’t just talk the digital talk. Instead, walk the user-experience walk.

Understanding the overlap between the SMB and Generation X demographics should lead banks to provide more targeted products, processes and customer service. Responding to their expectations and aspirations will drive longer-lasting and more profitable customer relationships.

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