Small business banking customers and the middle child syndrome

What do small business banking customers and middle children have in common, you ask? In a word: overlooked. With corporate banking customers getting the white-glove service, and retail customers getting the latest cool gadgets, small business banking customers often get forgotten.

Which hardly seems fair, considering that small and medium-sized business customers (SMBs) represent a big portion of banking revenue pools, maintaining the highest share of wallet in traditional core products like deposits and loans.

Screen Shot 2017-05-02 at 11.10.22 AM.png

And yet – with the exception of a few big banks the likes of PNC, Chase and Bank of America – most US banks prioritize retail and commercial banking customers. This is particularly obvious in how they allocate resources to digital services, with business banking services lagging far behind in development relative to retail banking technology. This has SMB customers switching banks at increasingly higher rates than personal banking customers, or seeking high-tech alternatives to meet their business needs.

According to JD Power’s U.S. Small Business Banking Satisfaction Study, SMB customers indicated low satisfaction with their bank’s services, particularly their online and mobile channels. Not surprisingly, 47% of SMB customers indicated that they would switch financial institutions if better mobile tools were offered, and close to 27% of SMBs are either planning to switch banks, or are not sure if they will stay with their current bank (Mirador 2016).

Screen Shot 2017-05-02 at 11.37.45 AM.png

So what exactly do small business customers need?

According to a survey by Javelin Strategy & Research, 56% of SMB customers indicated that they want digital services that provide a consolidated view of company finances, monitor payments and manage cash flow. More than that, they want insights into their financial performance and personalized, contextualized advice.

To corroborate this, BAI’s Research Study for Small Business Banking Demands found that there were notable gaps in SMB customers’ perception of their banks’ services, showing an unmet need for cash flow management and advisory services. In light of this, we can conclude that the solutions SMB customers are seeking from their banks are as follows:

  • On-the-go access to their funds
  • A way to organize and keep track of their business expenses
  • A way to monitor and predict cash flow
  • Relevant, proactive product offerings
  • Peer-based insights and trends in their respective industries
  • Guidance and advisory services

Tapping into small business banking market potential

In order to grow their business relationships and tap into the unrealized potential of SMBs, banks need to provide mobile services with advanced capabilities that go beyond core banking, transactional services. In particular, banks must consider mobile services that properly address SMBs pain points – namely in the area of expense and cash flow management. Here are some easy-to-implement ways that banks can consider augmenting their SMB mobile banking services:

  • First of all, don’t repurpose retail banking services.  Small business banking customers are a unique group. That means their banking services need to be solving for their unique needs.
  • Help SMBs with their operational efficiencies. Business owners are bogged down by administrative tasks – tracking receipts, expenses, and cash-flow are major time-burners. Moreover, most SMBs prefer to manage their books on their own to keep costs down, which means reconciliation is another pain point banks should consider resolving.
  • Adopt a mobile-first approach to cash flow management and expense tracking. Small businesses are not always led behind a desk. These owners need advanced mobile capabilities, that address their individual needs. They should be able to approve expenses, submit expense reports, and reconcile their statements directly from their phone.
  • Provide actionable insights. Small business owners often struggle with budgeting and understanding their own spending. Help them understand how they’re spending their money, and identify where expenses are typically occurring.
  • Consider a more open architecture and the use of APIs. Take a page out of JP Morgan and Wells and capitalize on the open API ecosystem. Partner with non-bank specialized service providers, like Intuit, to deliver a seamless bookkeeping experience for your business customers.
  • Offer advisory services. Fee-based advisory services present huge revenue potential. Small business owners, particularly those just starting out, are hungry for guidance. Who better to help them plan for financial health than their financial institution?


To see how a major UK augmented their small business banking service with Sensibill’s Receipts Solution, click here.