SMALL BUSINESSES AND CHECKING – MIXING BUSINESS WITH PERSONAL

Some small businesses are mixing business and personal checking, according to a recent survey by SYNERGISTICS Research entitled, Evaluating the Personal Financial Behavior of Small Businesses.  The large majority of small businesses that have checking accounts (81%) were asked detailed questions to determine the exact type of account being used for their business.  Most, eight in ten, report they do use a business checking account only for business purposes.  Another one-tenth report that they have a business account they use for both business and personal purposes.  About one in twenty checking holders say a personal checking account is used for both business and personal purposes.  This is wider among respondents in low-volume firms, those in service industries, and those with a small number of employees.  A very small number – 3% – use a personal checking account only for business purposes, a finding again more widespread among low-volume firms. Overall, about one-tenth are found to be using personal checking accounts for business purposes.

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Genie M. Driskill, COO of SYNERGISTICS, stated, “Checking accounts are the cornerstone of small business relationships.  Overall, usage of business checking accounts is widespread among small businesses.  However, there are a number of ‘mixed-use’ situations that may represent marketing opportunities for providers to ‘tighten up’ their small business checking customer base.  Overall, about one-tenth of the small business checking market in some way is using personal accounts for business purposes, which tends to be concentrated among lower volume firms.  Moving these customers to business checking should certainly be a priority for providers.  Conversely, the other one-tenth who indicate they are using their business accounts for some personal purposes may represent a cross-selling opportunity for more suitable household checking accounts.”

These are among the findings from SYNERGISTICS study, Evaluating the Personal Financial Behavior of Small Businesses, featuring online interviews with 616 owners and executives of small businesses with annual sales of $50K-$5M. Industry categories include manufacturing, wholesale, retail, and services.  This study examines the business and personal financial usage profile of small business owners.  It explores issues concerning the selection process for financial accounts and providers, cross-selling, relationship managers, and channel usage.

PREPAID CARDS – LOCATION, LOCATION, LOCATION

Prepaid cards are growing in usage and banks need to step up their game as prepaid card outlets in order to compete in the prepaid card market, according to a recent survey by SYNERGISTICS Research entitled, Marketing Prepaid Cards.  Findings from the survey reveal that discount stores such as Walmart or Target are the top mentions, being indicated by more than six in ten general-purpose prepaid card users.  More than four in ten say they typically purchase general-purpose prepaid cards from a supermarket or grocery store.  About three in ten cite convenience stores/gas stations and credit card organizations.  Slightly more than one-quarter say they typically purchase general-purpose prepaid cards at a bank or savings institution.  More than one-fifth indicate purchasing from check-cashing facilities.  One in six report department stores, while one-tenth mention Internet-based companies.

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William H. McCracken, CEO of SYNERGISTICS, stated, “Prepaid cards are being used increasingly for a variety of purposes beyond being gift cards and can be purchased in many different locations.  General-purpose prepaid cards, which can be used wherever major cards are accepted and are offered by many financial institutions, are obtained more widely at a number of locations other than banks or savings institutions.  Discount stores are clearly a top outlet, and it is no secret that Walmart has made great inroads into the prepaid card market.  Consumers are also more likely to be going to grocery stores, convenience stores, and credit card organizations than to banks to obtain general-purpose prepaid cards.  Financial institutions will need either to establish channels of distribution through these types of retail outlets or more aggressively promote that they sell prepaid cards at their branches or via their websites.”

These are among the findings from SYNERGISTICS study, Marketing Prepaid Cards, featuring 1,005 national Internet interviews with consumers age 18 or older.  This study examines the consumer perspective on prepaid cards.  It examines current usage and demand, new services and features, pricing, and marketing strategies.  Results will be presented to clients during a teleconference on May 18, 2015 at 2 p.m. (EST).

DIGITAL CHECKING SPARKS INTEREST

A significant number of consumers express interest in a check-free and digitally oriented checking account, according to a recent survey by SYNERGISTICS Research entitled, Checking Account Acquisition and Retention. Survey respondents who currently have a checking account were read a description of a new checking account for those who do not write checks but use debit cards, ATMs, and online or automated payments and withdrawals. They were informed that the new account may have a monthly fee that could be waived for maintaining balances, making a monthly direct deposit, or paying at least one bill online monthly and asked about their interest in this type of checking account. Overall, more than four in ten checking account holders express interest in this type of digital checking account. One in seven report they would be “very” interested. Those ages 18 to 34 are found to be highly interested in this type of product, with two-thirds of this group expressing interest.

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Genie M. Driskill, COO of SYNERGISTICS, stated, “The consumer checking account is for most consumer households their primary or main financial relationship. Although not the highest balance account relationship held by most, it is typically the most active in terms of transactions and money movement. And very importantly, checking accounts often are the gateway to other financial relationships with customers. In today’s world of digital banking, providers are looking for ways to revitalize this traditional product, particularly for the next generation of customers. The interest expressed by younger consumers in a digital or check-less checking account that shifts activity to electronic or automated channels suggests the direction that checking might take going forward. Issuers should be forging their plans now for a more digitally-oriented checking account for the future.”

These are among the findings from SYNERGISTICS study, Checking Account Acquisition and Retention, featuring 1,001 national Internet interviews with consumers age 18 or older. This study evaluates the checking account relationship in order to assist providers in developing effective acquisition and retention programs. It examines onboarding and cross-selling, packages and value-added services, reward programs, and pricing issues.

BALANCE TRANSFERS: BEST PROSPECTS ARE CURRENT CUSTOMERS

Balance transfer offers have been most effective when targeted at an issuer’s current cardholders, according to a recent survey by SYNERGISTICS Research entitled, Credit Card Marketing Strategies.  One in six cardholders indicate they transferred a balance from one card to another in the past year.  This activity has been widest among 18- to 34-year-olds, narrowing with increasing age.  It also tends to widen with household income.  Most of these respondents, three-fourths, indicate that this balance transfer was in response to a promotion received.  Interestingly, most of these report that the promotion was from a current credit card provider; one-third say that the offer was from a new provider.

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William H. McCracken, CEO of SYNERGISTICS, stated, “Credit card balance transfer offers were once a very prevalent marketing tactic used by card issuers to attract new customers and shift market share.  Activity significantly declined during the recession and credit crunch but is now beginning to revive.  In a twist, our study indicates that much of the balance-transfer activity today involves credit cards already held by consumers rather than promotions for new credit cards.  Issuers are meeting with success by employing balance transfer offers to strengthen relationships with their most creditworthy customers and possibly gain additional income from fees associated with balance transfers.  To a lesser extent, card issuers may be able to attract new customers with balance transfer offers.  Given that recovery in the credit markets will continue, balance transfer programs are likely to become even more widespread.”

These are among the findings from SYNERGISTICS study, Credit Card Marketing Strategies, featuring 1,001 national Internet interviews with consumers age 18 or older.  This study examines consumers’ credit card activity with an emphasis on factors that may impact account acquisition and retention – pricing, rewards, value-added services, and customer service.

WOMEN SMALL BUSINESS OWNERS ARE AVID DEBIT CARD USERS

Business debit cards are essential equipment for women small business owners, according to a recent survey by SYNERGISTICS Research entitled, Women Small Business Owners: Market Insights.  Six in ten women-owned small businesses with checking accounts indicate having a business debit card.  This is slightly higher than the incidence among male-owned small businesses, which is indicated by half.  Women small business owners are also more frequent debit card users than men, reporting an average monthly frequency of 16.3 (median = 5.0) vs. 9.1 (median = 5.0) for men.  Nine in ten women small business owners with debit cards indicate receiving their business debit card when they opened their business checking account.

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Genie M. Driskill, COO of SYNERGISTICS, stated, “As one of the fastest-growing segments of the small business market, financial services providers are reaching out to women-owned businesses in an effort to capture and grow relationships with this attractive group.  The financial services usage of women-owned small businesses is very similar to that of small businesses owned by men.  However, there are subtle behavioral differences that need to be addressed by financial institutions when designing and implementing small business programs and strategies.  Findings from our survey reveal that business debit cards are widely used by women-owned small businesses.  In fact, women small business owners are slightly more avid users of business debit cards than men.  This significant usage suggests that debit cards should be considered as standard business checking account offerings alongside checks.”

These are among the findings from SYNERGISTICS study, Women Small Business Owners: Market Insights, featuring online interviews with 448 women small business owners and 152 men small business owners with annual sales of $50K-$5M. Industry categories include manufacturing, wholesale, retail, and services.  This study examines the financial profile of women-owned small businesses, including experience with relationship managers and the extent of overlap of business and personal provider relationships. In addition, usage of delivery channels and response to marketing tactics are measured.

PC BILL PAY SURPASSES CHECKS AS A BILL PAYMENT METHOD

Consumers now use a variety of methods for paying bills, and online PC bill pay and traditional checks are the top two used, according to a recent survey by SYNERGISTICS Research entitled, Evaluating the Consumer Payments Market.  Internet households report paying a mean of 13.3 bills in a typical month (median = 8.0).  The average number of bills paid monthly is higher among 18- to 34-year-olds and increases with household income.

Online PC bill payment accounts for 37% of monthly bills paid.  Writing checks to pay bills accounts for 22% of volume.  In terms of other bill payment methods, pre-authorized payments, primarily checking account withdrawals, are used for 10% of bill payment volume.  Other bill payment options – debit cards (7%), cash (8%), and credit cards (7%) – each account for less than 10% of overall volume.  Mobile bill pay accounts for 5% of bill payment volume, and online using tablets/e-readers represents 3%.

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Genie M. Driskill, COO of SYNERGISTICS, stated, “Household bill payment is naturally a very basic element of consumer payments overall and represents significant transaction activity and volume.  Online payments, although not totally dominating bill payment activity, obviously is a widely preferred method among consumers.  Our findings also reveal that check writing has ongoing importance as a bill payment method, particularly among older customers, and is a core function of checking account providers.  Other methods, although accounting for small proportions of volume, are used by notable numbers of consumers and should always be made available by billing organizations.”

These are among the findings from SYNERGISTICS study, Evaluating the Consumer Payments Market, featuring 1,009 national Internet interviews with consumers age 18 or older.  This study examines consumers’ current payment habits, the adoption of and receptivity to innovative alternatives, and experience with issues of payment fraud or security.

THE PAYDAY LOAN DILEMMA

Should banks offer payday loans?  Even as greater regulation looms over payday or short-term loans, consumers are saying banks should be able to offer these products to their customers, according to a recent survey by SYNERGISTICS Research entitled, The Role of Alternative Financial Providers.  Overall, a small number of survey respondents – one in six – report ever obtaining such a loan, with younger respondents being more likely to have done so.  Significantly, most of these borrowers – nearly nine in ten – indicate wide satisfaction with the process of obtaining their short-term loan.  Six in ten were “very” satisfied.  When respondents are asked if they think that traditional financial institutions should offer these types of short-term or payday loans, more than four in ten say they should.  This perception tends to be more widespread among younger respondents.

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William H. McCracken, CEO of SYNERGISTICS, stated, “Payday lending is mired in controversy, with consumerists and legal and regulatory groups calling for increased scrutiny and regulation.  A number of the major banks recently exited the market, while others are considering their options.  Payday loans are a niche product used by a small number of consumers who indicate they are very satisfied with the process of obtaining their short-term loan.  At the same time, a significant number of consumers believe that traditional financial services providers should offer this form of lending.  Banks then face the dilemma of offering a short-term credit product consumers want that addresses the concerns of consumerists and legal and regulatory groups.”

These are among the findings from SYNERGISTICS study, The Role of Alternative Financial Providers, featuring 1,003 national Internet interviews with consumers age 18 or older.  This study examines consumer usage of a number of alternative providers of financial services, including check cashing centers, retailers, payday lenders and pawn shops. Issues related to specialized services such as prepaid cards, financial kiosks, secured credit cards, and money transfer services are also explored.

2015 – A BANNER YEAR FOR HOME EQUITY CREDIT?

An unprecedented proportion of homeowners now express interest in home equity credit products, according to SYNERGISTICS Research Corporation’s Fourteenth Annual Home Equity Lending Monitor.  In response to recovery in the housing market, an anticipated rebound in the home equity credit market appears to be “taking hold.”  According to survey findings, one-fifth of homeowners indicate that they have some type of credit secured by the equity in their home, other than a first mortgage.  Those homeowners who do not have any type of credit secured by their equity – nonholders – were asked how interested they would be in an equity line of credit.  One-third of nonholders express some degree of interest, and one-tenth would be “very” interested.  This group, defined as ELC prospects, represents 28% of all homeowners.  Half are nonholders who do not express interest.

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William H. McCracken, CEO of SYNERGISTICS, stated, “Overall, the home equity credit market continues to reflect a rebounding housing sector and overall economy.  Findings from our recent wave of the Home Equity Lending Monitor, reveal a significant level of interest in home equity credit products.  Providers have significant opportunities in the home equity market.  Maintaining and strengthening current equity credit relationships should always be a priority. In addition, equity credit providers should prepare to ‘ramp up’ strategies and tactics to widen market share in a growing prospect base.”

These are findings from SYNERGISTICS study, Fourteenth Annual Home Equity Lending Monitor 2014, featuring a national telephone and Internet survey of 1,000 homeowners age 18 or older.  This survey is the industry’s most comprehensive examination of consumer behavior in the home equity market including both home equity lines of credit and second mortgages.  Findings will be discussed in a telephone conference for project sponsors on Monday, January 26, 2015.

PROVIDING CREDIT EDUCATION AND INFORMATION IS A “MUST”

In an age where financial literacy is becoming increasingly important, lenders have an opportunity to be positive and pro-consumer by providing credit education and information to consumers according to recent research conducted by SYNERGISTICS Research Corporation entitled, Revitalization of the Consumer Credit Market. Three in ten consumers report that they have at some point received educational material or other information from a financial institution about credit topics such as building a good credit history or managing debt.  Younger consumers, those ages 18 to 49, are more likely to report receiving this type of information. Almost all, eight in ten, have found this type of information to be valuable.  Furthermore, a solid majority – two-thirds – are likely to consider the institution that provided the information first when they need credit services in the future.  Among those who have not received this type of information, most – almost two-thirds – would see it as valuable.  Positive reaction is widest among 18- to 34-year-olds.

In addition, banks and financial institutions top the list when consumers are asked where they would go for education on credit or debt management.  Four in ten identify banks or financial institutions. This is wider among both the youngest and oldest respondents.  One-third indicate online sources, and three in ten cite an independent financial advisor.  Government resources are least likely to be indicated as a source of credit and debt information.

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William H. McCracken, CEO of SYNERGISTICS, stated, “Calls for greater and more in-depth consumer education on credit and debt management emerged as a result of the mortgage and financial crisis and are ongoing, particularly in the case of student and education loans. Financial institutions are in an excellent position with respect to providing information on credit and debt management. Opportunities exist to reach out to consumers with this type of information.  In addition, consumers indicate that they would go to banks or financial institutions if they needed education on credit or debt management. Younger consumers who are most likely to value this type of information are a prime target market as their need for credit services increases with their changing life cycles. Providing credit and debt management education and information will enhance favorable consumer attitudes and ideally gain additional credit relationships.  It is good business for lenders and a win-win situation for all involved.”

These are among the findings from SYNERGISTICS study, Revitalization of the Consumer Credit Market, featuring 1,008 national Internet interviews with consumers age 18 or older.  This study examines consumers’ current and potential usage of credit products, including credit cards, mortgages, equity credit, auto loans, installment loans, personal loans and lines of credit, as well as consumers’ decision-making process and future demand.  In addition, consumer response to education and debt management tools is measured.

SMALL BUSINESS PREPAID CARDS CAN ADD FEE REVENUE

There is potential for growing usage of prepaid cards in the small business market, according to a recent survey by SYNERGISTICS Research entitled, Opportunities in the Small Business Card Market. More than half of small business respondents were found to be aware of business prepaid cards. Close to half of those aware say they obtained this type of card in the past year, representing one-quarter of all small business respondents. In measuring potential, it was found that more than four in ten nonusers express interest in obtaining a business prepaid card. One in seven nonusers are “very” interested. More than six in ten of the business prepaid card prospects (those “very” or “somewhat” interested) would be willing to pay a one-time set-up fee of $50 for this type of card. Prospects were further asked if they would be willing to pay a monthly maintenance fee at various fee levels. Overall, about three-quarters of the prospects would pay a maintenance fee of at least $10 monthly, including more than four in ten who would pay $50 monthly.

Genie M. Driskill, COO of SYNERGISTICS, stated, “Prepaid cards are beginning to make their way into the small business market. These cards can be used in a variety of ways. They can be used to track and monitor employee expenses and spending. Also there are opportunities for promoting their usage as payroll cards. While current usage is narrow, particularly when compared to usage of debit and credit cards, there is an opportunity for growing interest in prepaid cards in the small business market. With increased marketing and communication, usage
of prepaid cards can be increased in the small business market. Along with debit and credit cards, prepaid cards can be marketed as part of the small business card product line providing small businesses with an array of card and payment alternatives.”

These are among the findings from SYNERGISTICS study, Opportunities in the Small Business Card Market, featuring online interviews with 604 small business owners/executives with annual sales of $50K-$5M. Industry categories include manufacturing, wholesale, retail, and services. This study examines small business usage of business credit, debit, and prepaid cards, as well as reaction to reward programs, value-added card services, and mobile innovations.