For some time small businesses have found themselves betwixt and between when it came to online and mobile app banking and payments services. Many institutions stuck smaller firms into consumer services, with features not sophisticated enough for their developing needs. But corporate-level online and mobile banking was often overkill.
Now, new research by Keynova Group suggests that more institutions are finding a happy middle ground. And while online services typically remain more sophisticated than mobile services, more institutions are closing the gap.
Finding the right balance has been a challenge and fine-tuning remains to be done, according to Susan Foulds, managing director at Keynova. Success varies depending on the business need.
Cash management is one area with remaining room for improvement. “There’s a fine line between having too much complexity for your average small business that doesn’t have a full-time finance person and yet giving them the options they need,” says Foulds.
Major institutions’ cash management offerings have been improving, she says, though “no one’s quite broken the code yet.” Foulds says PNC offers small firms the most detailed cash flow insights out of the 11 banks studied, adding sufficient value that the bank can charge a small fee for the service.
All of the banks studied enable both business-to-business and business-to-consumer payments via Zelle, but only about half permit users to schedule future Zelle payments.
Enabling owners and managers of small firms to access third-party business apps from within small business mobile banking apps is important, according to Foulds. Among the institutions that the Keynova Small Business Banker Scorecard studies from year to year, two especially stand out in this regard: PNC and Bank of America.
The small business mobile app of BofA — the bank topped the consulting firm’s small business rankings — interfaces with over a dozen outside apps, including QuickBooks; Run, an ADP payroll and human resources app; payment apps including Stripe, Square and Expensify; and Google Analytics and Google Workspace. (The other institutions include BMO, Chase, Citi, Citizens, Huntington, TD Bank, Truist, U.S. Bank and Wells Fargo.)
Much of this kind of integration relies on APIs — application programming interfaces — according to Foulds, so why isn’t it more widespread at more institutions? She explains that concerns about risk continue to haunt larger institutions (as well as other banks) that rely on core vendors for their online and mobile offerings. Typically, there’s a period of vetting outside apps to avoid importing weaknesses into the bank’s services.
Improving Digital Payments and Transfers for Small Companies
Most banks “offer a solid digital payments experience for small business accounts, largely fashioned on consumer payments — with a few notable exceptions,” according to Keynova’s research. To study online and mobile services, Keynova opens working accounts with each institution in order to experience usage as close as possible to that of actual customers.
Just over half of the study group — 55% — offer a consolidated payment page. Keynova showcased the Chase Bank Payment Center and related money movement functions as a standout among the group. As shown below, small firms can see four major payment types — automated clearinghouse payments, bill pay, Zelle and wires and global transfers all on one master screen. Foulds says Chase designed this page specifically for small firms’ use — it offers different functionality for consumer customers and for corporate clients.
Behind each of the payment methods is similar versatility, according to Foulds. Clicking through to ACH payments gives the firm a choice of payment speeds. At the fastest level Chase offers instant payments via the Real-Time Payment network operated by The Clearing House. Foulds notes that this real-time service comes with a fee of 1%, up to $25, per transaction. She adds that none of the institutions studied have started to offer the year-old FedNow instant payment service to small businesses yet, though some have made it available to larger companies.
Foulds points out that the payments center also centralizes key information, such as recent transactions, in one place. The firm notes that Chase provides access to this range of payments channels without requiring customers to move up to a more complicated commercial cash management service.
By necessity, concepts like the payment center that work horizontally on a computer screen tend to be more vertical on apps, says Foulds.
Chase provides a very complete opening payments center screen in that format, above, and continues it through other functions, such as an RTP transaction, shown below.
A scan of features on small business sites Keynova reviewed and how frequently they are offered:
- Permit external account-to-account transfers between accounts owned by the customer (example, owner’s business account and personal account): 73%
- Enable grouping of bill payees: 64%
- Reports listing pending transactions requiring approval: 45%
- Display net projected balance on a summary or primary bill payment page: 36%
Read more: How to Disrupt the Disruptors in Small Business Banking
When the Owner Isn’t the Only Person Needing Access
Even in the case of a single proprietorship, others may need to access a small firm’s account via computer or phone. Foulds says institutions have different ways to handle this need. Specific functions include setting transaction authority for each additional party given access to the account as well as differing levels of access to account information.
In PNC’s approach, shown below, the small business owner can assign and remove specific access privileges, such as viewing accounts, transferring funds, accessing cash flow insights, and managing payroll.
TD Bank allows access to be set by specific function as well. Alternatively, TD Bank small business customers can set different levels of “role permission,” which turn functions off or on depending on the person’s company status.
Read more: How Can U.S. Banking Grow Instant Payments Faster?
Mobile Banking App Access is Small Firms’ Next Frontier
Much of small business banking remains tied to a computer screen, according to Keynova, but small firms’ owners increasingly need the flexibility that mobile apps provide. This applies especially to businesses that have ongoing or seasonal needs that can’t be delivered from a desk — and when the workforce and management may be one and the same.
Owners and managers need a good handle on cash flow information, but only about a third — 36% — of the banks offer cash flow analysis and reports in mobile format. Keynova cited Bank of America as a particularly effective example, as shown by the pair of screens below, that show graphic representations of flow into and out of the account.
Keynova pointed out that the volume of transactions in a business account is much greater than the typical consumer account, making the ability to search or filter records from the mobile app essential. While 82% of the institutions offer some way of finding items, only 45% offer the ability to search by key words.
Virtual assistants are the coming wave for mobile functionality, and Keynova points out that U.S. Bank’s Smart Assistant and Wells Fargo’s Fargo both filter transactions.
Foulds says virtual assistants are starting to become of more help to business customers, and that that will be helped as more of them grow in sophistication.
“Right now only a couple of them are able to assist significantly with small business accounts,” says Foulds.