By: Julie Story
Many banks and credit unions have recognized the effectiveness of online and mobile banking strategies in appealing to retail segments. However, when it comes to catering to small business customers and members, new data shows that many prefer traditional modes of communication and a positive branch experience.
The findings of a new study conducted by BAI Research reveal that when it comes to banking, small businesses prefer branches and place high value on personalized service. For example, more than half of all business transactions are conducted at a branch and in-person and live agent phone conversations are rated as important components to building strong business relationships. Another 20 percent said they prefer branch banking to online portals, and less than 25 percent of small businesses surveyed use mobile banking at all. Of those who do, only 8 percent rely on the mobile bill pay app. This is largely because more than half of polled business owners say they prefer traditional check usage to mobile payments for more organized record-keeping purposes.
Implications of the study
In an age when many banks are considering cutting back on branches, the study shows that this may have a negative effect when it comes to attracting small business customers. Owners said they prefer to discuss small business banking programs in-person and rely on meetings and interactions to make decisions about whether a particular financial institution is the right fit for their needs.
"As the financial services industry seeks to attract, retain and grow their small business relationships, these findings are critical in shaping strategic priorities," said Debbie Bianucci, president and CEO of BAI. "This research tells us that banks have the opportunity to differentiate themselves in the market through the development of creative strategies around how the branch can be used more effectively and efficiently to service this important segment within the context of cost containment initiatives."
Banks that heed the study's message and strive to provide a personalized and comprehensive banking experience to business customers may have a competitive edge in attracting and retaining business accounts in the future. It's important for banks and credit unions to avoid lumping retail and business customers and members into a single category when making decisions about the needs of their customer bases. While a shift to mobile platforms and technological innovations has become more crucial in attracting retail accounts, the opposite may hold true for business clients. The ability to cater to differing customer needs can help local institutions better compete with Wall Street banks.