By: Julie Story
As small- to medium-sized businesses try to stay competitive in a recovering economy, many are turning to their financial institutions and seeking out more advanced technology to help them grow. As mobile banking becomes more ubiquitous, and mobile commerce is expected to grow by tens of billions of dollars in a few short years, many companies are overhauling their systems to adopt more advanced platforms.
According to a recent poll of bankers conducted by FundTech, financial institutions are expected to see a growing potential for small- to medium-enterprises, or SMEs, as these companies demand new services. For example, 95 percent of those surveyed said that the SME market represented opportunities that were equal to or greater than other market segments. In addition, 57 percent categorized this potential as large or huge. Another 60 percent said the demand for new services from SMEs was greater than usual, while 20 percent said the demand for new small business banking products was "unprecedented."
As a result of the study, 38 percent of the financial institutions that responded emphasized developing their mobile channels and said this category would be their first priority. As technology is constantly evolving, many analysts agree that financial institutions that focus on providing mobile channels to business customers will remain profitable and maintain a greater piece of the market.
"The SME market offers an enormous growth opportunity to banks that understand their unique needs," said George Ravich, FundTech's chief marketing officer. "For the millions of SMEs that consider their pick-up trucks as their offices, the mobile channel provides a compelling level of convenience and control. The key to success is offering this market segment well-designed options that are developed for the three major platforms-smartphone, tablet and computer."
Despite the revelations that small businesses are interested in new channels, many financial institutions are still navigating the new rules imposed by the Dodd-Frank Act, which has imposed a financial burden on many institutions and their abilities to launch new programs. Many financial institutions agree that the provisions in the Dodd-Frank Act lack clarity, which makes it even more difficult for them to effectively comply with new regulations.
Although the new laws have inadvertently placed the largest financial burden on smaller institutions, such as community banks and credit unions, these entities remain more likely than megabanks to lend to small companies and offer flexible small business banking programs.