MOBILE BANKING AND PAYMENTS IN THE SMALL BUSINESS MARKET (Feb 2018)

Banking, Deposits, Transfers, and Payments

Apps and Alerts

Innovative Activities

Key Finding from a Previous Phoenix Synergistics Report:

In the 2016 Phoenix Synergistics survey, Small Business Channel Dynamics, findings revealed that small businesses’ usage of mobile phones for financial activities had increased notably since 2013.

Has usage of the mobile channel continued to grow among small businesses.

Research Description and methodology

This study examines small businesses’ experience with and interest in mobile banking and payments, as well as their reaction to various apps, alerts, and pricing options.

National Internet Survey – The survey will include 800 online interviews with owners and executives of small businesses with annual sales of $50K to $5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

November 21, 2017 – Final acceptance of client comments on the questionnaire.

November 21, 2017 – Charter fee date.

January 2018 – Initial results available.

February 2018 – Project Report available.

Strategic Objectives

  • Profile the PC-based online banking and financial activities of small businesses as a basis for assessing the potential for mobile activities. Identify types of accounts accessed and activities performed. Assess the extent to which laptop computers are used in a “mobile mode.”
  • Measure the extent to which small businesses are accessing their financial accounts with mobile devices – mobile phones or tablets. Detail mobile activity – accounts accessed, weekly frequency of usage, and types of activities and transactions. Assess differences, if any, between mobile phone and tablet activity.
  • Assess mobile bill payment activity. Measure current monthly frequency and contrast with PC-based activity. Determine relative usage of the sites or apps of FIs, billing organizations, and third parties.  Evaluate the potential for adoption of mobile bill payment in the next year.
  • Determine the role of the mobile channel for small business financial activities – major, secondary, or only for emergencies. Determine if mobile banking is used to access accounts at the main provider and if this channel would be recommended.
  • Examine current experience with and potential for innovative mobile activities – such as mobile cash management, mobile RDC, mobile POS payments, and mobile card processing. Assess current mobile B2B payments activity.
  • Assess the potential for expanding the user base for mobile banking and financial activities. Determine reasons for non-adoption. Identify advantages that may be marketing points as well as disadvantages that may represent objections to address.
  • Determine if current or future usage of mobile banking is related to particular small business identifiers or variables – such as annual sales volume, industry segment, or number of employees.  Assess how other current channel behavior may impact the mobile channel

Research Issues

  • Mobile banking and payments is a growing and exciting area in the small business market.  Somewhat paralleling the consumer market, small business owners and executives are increasingly utilizing their mobile phones or other devices for day-to-day banking activities – including balance and activity inquiries, transfers between accounts, and remote deposits.  Indeed, previous Phoenix Synergistics research has found that mobile RDC has significant appeal among small businesses. Mobile payments is another area seeing notable adoption among small businesses.  This encompasses mobile bill payment, mobile payments at the point of sale, and mobile P2P payments.  In terms of receiving payments, mobile card readers – attached to a mobile phone or tablet – are also seeing widening popularity among small businesses.
  • Profiling this current activity is an important step in assessing the overall potential for the mobile banking and payments channel.  This includes aspects such as frequency of usage, preferences for apps vs. web browsers, and the utilization of mobile account alerts.  Pricing strategies and revenue opportunities are another important consideration in evaluating this market. Are small business customers willing to pay fees or maintain balances to have mobile banking and payment services?  Or is this primarily a relationship retention tool that creates account “stickiness”?
  • Non-traditional providers – such as PayPal and Square – are also an element in the small business mobile banking and payments space – aggressively competing for a share of the market with an array of innovative products and services.  In this dynamic environment, it is necessary to understand the perspective of small businesses.  This study will give providers a better understanding of the mobile financial needs of their small business customers so they can design or refine mobile banking and payment services for small businesses.

EVALUATING THE SMALL BUSINESS PAYMENTS MARKET (Dec 2017)

Cards, Checks, and Cash

Payment Innovations

Bill Payment and Invoicing

Key Finding from a Previous Phoenix Synergistics Survey:

Findings from the 2015 Phoenix Synergistics study, The Small Business Payments Market, reveal that traditional payment methods are still the top performers in the small business payments market.

Has usage of innovative payment methods increased over the past two years?

  

This study examines the small business payments market assessing small business attitudes toward and usage of traditional and innovative payment methods.

National Internet Survey – The survey will include 800 online interviews with owners and executives of small businesses with annual sales of $50K to $5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

September 22, 2017 – Final acceptance of client comments on the questionnaire.

September 22, 2017 – Charter fee date.

November 2017– Initial results available.

December 2017 – Project Report available.

Strategic Objectives

  • Profile the current payment behaviors and preferences of small businesses – including cash, checks, debit cards, credit cards, online payments, and mobile payments. Determine if certain payment methods are used for specific purposes.  Assess the motivations or reasons for using a particular payment method instead of others.
  • Identify immediate opportunities to shift payment patterns among small business customers. Ascertain perceived problems with current payment methods. Evaluate if payroll processing represents an opportunity for providers.  Assess the barriers to adopting direct deposit.
  • Explore how financial institutions can assist small business customers with their bill payment needs. Determine how many bills are paid per month and what methods are used. Determine the barriers that exist to further adoption of both online and mobile bill payment.
  • Measure the potential for further expansion of mobile payment activities among small businesses. Examine current activity – including bill payment, transfers between accounts, loan or credit card payments, e-commerce, and point of sale payments. Assess the viability of mobile B2B payments.
  • Evaluate how providers can help small business customers improve or streamline their methods of payment acceptance from customers. Identify how payments are currently accepted and which methods are most prevalent. Assess the potential for innovative options for accepting payments –  such as electronic invoicing, mobile RDC, and mobile processing of card transactions.
  • Assess the relationship implications related to adoption of certain payment methods – including such aspects as having a credit card from the main checking provider and conducting online bill payment at the FI’s site. Determine if mobile payments are driven by apps downloaded from FIs.
  • Determine how new payment methods and options should be marketed to small businesses.  Evaluate the effectiveness of traditional segments – such as sales volume, industry classification, or number of employees.  Explore how current payment behavior relates to the potential for innovative payment alternatives.

Research Issues

  • There is a great deal of activity in the small business payments market as new payment alternatives appear almost overnight. Digital services such as PayPal and Square are just a couple of the options.  These new services give small businesses an array of payment choices to use in all types of situations. Traditional options such as checks and cash are frequently used and in some cases are the preferred payment alternatives. Payment cards, including credit and debit cards, are also available to meet the payment needs of small businesses. Small businesses can now offer their customers a number of payment options.
  • Online bill payment is common practice among small businesses.  This activity is expected to gradually move to mobile devices.  Remote deposit capture services have been available for a number of years.  Providers can offer payment solutions in the areas of payroll, merchant processing and accounts receivable which are designed to make the day-to-day operations of the small business easier and more seamless.
  • Competition in the small business payments market is intense as Fintech and other non-traditional providers design and market new products and services.  These companies are creative, agile and aggressive competitors. Traditional institutions need to be ready to face this competition with their own innovative payment products.  In this environment, it is essential for providers to understand the payment needs of small businesses. [F258]

MILLENNIAL SMALL BUSINESS OWNERS: MARKET INSIGHTS (Oct 2017)

Attitudes and Expectations

Channel Strategies

Provider Loyalty and Competition

Key Finding from a Previous Report:

In the 2016 Phoenix Synergistics survey, Optimizing Small Business Checkingfindings revealed that excellent customer service and pricing were the top criteria for choosing a business checking provider. Do Millennial small business owners differ in their attitudes and decision making criteria?

Research Description and methodology

This study examines the financial profile of Millennial small business owners, including their attitudes and expectations, financial needs and behaviors, provider relationships, and channel usage.

National Internet Survey – The survey will include 800 online interviews with small business owners ages 19 to 36 – annual sales of $50K to $5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

July 21, 2017 – Final acceptance of client comments on the questionnaire.

July 21, 2017 – Charter fee date.

September 2017– Initial results available.

October 2017 – Project Report available.

Strategic Objectives

  • Profile the financial activity of millennial-owned small businesses in terms of accounts and services used and provider relationships. Determine the demand for financial products in the next year. Evaluate the selection criteria or features millennial small business owners place importance on in choosing a financial provider.
  • Examine the attitudinal factors that frame or impact the approach to millennial small business owners. Assess their business objectives – including rapid growth, visible success to attract the attention of potential investors or buyers, or sustained growth for financial security and profitability. Explore if millennial small business owners have a sense of provider loyalty that can be a competitive advantage in relationship expansion.
  • Assess the degree of overlap in business and personal financial relationships among millennial small business owners. Determine which relationship was established first. Examine the factors or reasons that drive or account for these overlapping relationships.
  • Analyze the motivations or reasons behind the startup of businesses among millennial small business owners. Examine the sources of advice or guidance used in the startup process and used for ongoing operations of the business. Ascertain what financial resources or financing were used for startup.  Determine if these businesses have a formal business plan.
  • Measure the usage of various channels – including branches, ATMs, PCs, mobile phones, and tablets – for conducting financial activities. Determine if preferences vary by types of activity – such as account information, transactions, customer service, and marketing-related activities. Assess how widely these businesses rely on the online channel in marketing to their customers.
  • Determine which marketing and promotional channels have been utilized by millennial small business owners in obtaining financial accounts and services. Examine usage of online resources – including FI sites, social media, business networking forums or communities, and lending marketplaces. Assess what channels are preferred for applying for accounts and services.
  • Assess if millennial-owned small businesses should be approached using marketing strategies and tactics similar or different from those for small businesses as a whole.  Determine if traditional measures  – such as annual sales volume and number of employees – have the same relevance when developing strategies and tactics to approach this market.

Research Issues

  • A great deal has been written about millennials who are considered one of the most influential generational segments of today.  Millennial small business owners are an important force in the market. They have been described as savvy, creative, confident and optimistic.  Many millennials are entrepreneurial and starting their own businesses; others are taking over existing businesses previously run by their parents or other relatives.  Some have abandoned college to start their business reflecting their need to exercise control and flexibility over their career and future.  It is clear Millennial small business owners are a unique segment whose attitudes and expectations may be entirely different from other small business owners.
  • The financial needs and behaviors of millennial small business owners may be unique, requiring providers to be creative and think outside the box. Keeping up with the rapid pace of technological innovation is a given when developing and marketing products and services for this group.  Competition from Fintech and non-traditional providers extends to financial services including lending, online and mobile banking, and payment solutions.  These new competitors are a force to be reckoned with in serving Millennial small business owners who are considered to be less loyal – switching providers to meet their needs.
  • It is essential to understand the financial attitudes and expectations, behavior, and usage patterns of Millennial small business owners.  Usage of traditional and innovative channels needs to be assessed.  The overlap in personal and business financial behavior needs to be examined. Provider usage and selection factors need to be measured.  This study will assist providers in acquiring and retaining Millennial small business relationships.

OPPORTUNITIES IN THE SMALL BUSINESSES CREDIT MARKET (June 2017)

Decision Process; Marketing & Application Channels

Traditional, Online, and Alternative Lenders

Credit Cards, Loans, and Lines

Key Finding from the Phoenix Synergistics Survey:

According to findings from Phoenix Synergistics survey, Opportunities in the Small Business Credit Market, one-fifth of small businesses have been turned down for credit in the past two years, with most being declined by a current FI.
What are the relationship implications of denying credit to small business customers?

  

This study examines small business usage of various credit products and lenders, as well as their decision-making process and future demand. In addition, the channel usage and preferences of small businesses as related to credit are measured.

 

National Internet Survey – 800 small business owners/executives – 200 in the following sales volume categories – $50K-$99.9K; $100K-$499.9K; $500K-$999.9K; $1M-$5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

 

June 2017 – Project Report available.

Strategic Questions

  • What is the current credit usage profile of small businesses? Which credit service is considered most important?  Are credit services held with the main provider or are these separate relationships?
  • How extensive is the role of credit cards as a source of revolving credit among small businesses? What is the relative usage of business/corporate cards and personal cards?  Are there specific reasons that personal credit cards are used for business purposes?
  • Does personal credit in the owner’s name play a role in small businesses’ financing? Which specific accounts or services are used?  For what reasons or motivations is personal credit used for business purposes?
  • How active have small businesses been recently in shopping and applying for credit? What channels have been used?  Was there comparison shopping?  What situations or problems, if any, were encountered when applying?  What features of credit providers, products, and the decision process are most important to small businesses?
  • How much of a role do non-traditional credit providers and services have in the small business market – such as vendors and suppliers, internet-only lenders, peer-to-peer lending, or private financing? What has been the experience with crowdfunding?  How much potential exists for these lending sources to capture a larger share of market?
  • How strong is the demand for credit among small businesses in the next 12 months – including both expanding usage of current services and obtaining new accounts? What channel preferences are there for information and application?  What major concerns exist regarding obtaining credit?  How have recent credit denials impacted provider relationships?
  • What variables and identifiers are best for segmenting and targeting the small business market for widening usage of credit services?  Are there approaches beyond conventional descriptors – annual sales and number of employees – such as channel preferences and receptivity to nontraditional providers?

Research Issues

  • The ability to obtain and access credit is often a “do or die” situation for small businesses.  With the recent recession and financial crisis, the small business credit market has been under pressure.  Banks and other providers did very little lending to anyone including small businesses.
  • More recently, this trend appears to be changing.  One recent survey of banking executives reported that close to seven in ten of those interviewed believed that small business lending would increase. Another source reports that banks are playing catch-up in the small business credit arena.
  • But small business lending has many more challenges today than before the recession.  The environment is extremely competitive as a host of online lenders have appeared.  These lenders can maximize technology to make lending more efficient.  Small businesses find that loan approval can occur very quickly with little to no hassle.  Today’s low interest rates are extremely attractive but the threat of rising rates is always there.  Assessing the small business credit market is critical for lenders of all types. [F253]

TAILORING CASH MANAGEMENT SOLUTIONS FOR SMALL BUSINESSES (Jan 2017)

Cash Flow, Account Management, and Information Reporting

Traditional and Online Products

Unmet Needs and Issues

Key Finding from a Previous Phoenix SYNERGISTICS Research Survey:

Findings in Phoenix SYNERGISTICS 2016 survey, Optimizing Small Business Checking, revealed that less than a majority of small business checking holders handle cash management activities online by PC.  Are there opportunities for expansion in this area?

  F249 Prop Graphic

Highlights of the Study

This study examines small businesses’ usage of cash management services for activities such as account management, information reporting, and cash flow, as well as their unmet needs in these areas.  Traditional and online methods of handling these activities are also assessed.

National Internet Survey – 600 small business owners/executives – 150 in the following sales volume categories – $50K-$99.9K, $100K-$499.9K, $500K-$999.9K, and $1M-$5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

October 28, 2016 – Charter fee/Intro pricing ends.

October 28, 2016 – Final acceptance of comments on questionnaire.

January 2017 – Project Report available.

Strategic Questions

  • What attitudinal or perceptual factors exist among small business owners or executives related to aspects of cash management – such as cash flow, payments, and collections? What problems or issues do small businesses experience in terms of their payment and collection activities?  Is the term “cash management” associated with certain activities or functions?
  • Do small businesses place a priority on projecting cash flow? Is this done as a formal process, on an ad hoc basis, or at all?  To what extent are automated processes a part of this?
  • How extensive is usage of specific cash management services among small businesses – such as merchant processing, lock box services, balance reporting, and automated tax payments? Are there gaps that represent an opportunity for providers?  Are these services part of formal cash management programs or used on an individual basis?  Is cash management an element of the main checking provider relationship or are third-party providers involved in this?
  • What are the delivery channel implications of providing cash management services to small businesses? To what extent do small businesses initiate these activities themselves using online banking or software versus relying on business bankers or bank staff?  What devices are used and for what activities?  Do small businesses use or desire mobile access for cash management?
  • What is the current usage of and potential for services or devices to improve collections or manage payments for small businesses – including remote deposit capture, mobile card readers, accounts receivable conversion, and Positive Pay?
  • What are the benefits or advantages of cash management that can be promoted to broaden and increase usage of these services? What perceived disadvantages or concerns exist that may represent barriers to overcome?  Do many small businesses see this as only appropriate for larger companies?
  • Are there small business identifiers or descriptors – such as annual sales volume, business sector, or number of employees – that are useful in developing strategies and tactics for expanding usage of cash management services?

Research Issues

  • The ability to successfully manage cash flow can make or break a small business.  Increasingly, small business banks are recognizing this need and developing solutions to assist their customers with this important aspect of operating a business.  Under the cash management umbrella, banks can include a host of tools and services such as account management and information, deposits, payables and collections, electronic invoicing, and merchant services. Remote deposit capture systems are promoted to small businesses to encourage faster deposits without having to go to the branch.
  • Cash management products and services need to be specially tailored to the needs of small businesses rather than being just a do-over of those for middle market and larger corporations. A number of providers are offering a suite of online tools that are compatible with a business’s accounting software.  Cash management products and services are often provided through the relationship manager or business banker who is familiar with the small business.
  • In order to develop cash management solutions, providers need to understand the issues and unmet needs that should be addressed. It is valuable to examine what components small businesses need as part of a cash management solution and how they relate to other business operations.  Reaction to pricing also needs to be measured. With this information, providers will be able to develop and promote cash management products and services for small businesses, which can help strengthen the overall relationship. [F249]

EXPANDING SMALL BUSINESS CARD PROGRAMS (Nov 2016)

Product Line Strategies

Specialized Rewards and Services

Account Management

Key Finding from the Report:

Results from SYNERGISTICS 2014 study, Opportunities in the Small Business Card Market, revealed that a majority of small businesses would value the ability to customize the look of their business credit cards.  Would these companies pay a fee for this specialized service?

F247 Prop Graphic

Highlights of the Study

This study examines small business usage of business credit and debit cards, as well as reaction to reward programs, value-added card services, and account management options.

 

National Internet Survey – The survey will include 600 small business owners/executives – 150 in the following sales volume categories – $50K-$99.9K, $100K-$499.9K, $500K-$999.9K, and $1M-$5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

August 19, 2016 – Charter fee/Intro pricing ends.

August 19, 2016 – Final acceptance of comments on questionnaire.

November 2016 – Project Report available.

Strategic Questions

  • What is the share of market among small businesses between usage of business or corporate credit cards and personal credit cards used for business purposes? What are the reasons or motivations for using personal credit cards?  Is there potential for expansion of business or corporate card usage – including conversion of personal card users?
  • How widespread is participation in reward programs among business/corporate card users? Which types of rewards are seen as most valuable?  Are small businesses willing to pay fees to have credit card rewards?
  • Are premium and prestige credit cards an appropriate product for the small business market? What upscale features and benefits have the most appeal?  Is there fee revenue potential for this product?
  • How are small businesses using debit cards? How does this activity differ from credit cards in terms of frequency, volume, and purposes?  For what criteria or reasons would a debit card be used instead of a credit card?  Is there any growth potential for the business debit card market?
  • What is the overall role of credit in small businesses’ credit card activity?  To what extent have users obtained a card because it has a large credit line?  Is using cards as a credit line to finance major business expenditures a major purpose?  Are small business credit cards used as substitutes for other credit products?
  • What are the trends and dynamics for online account management among small business/corporate card users? Are mobile and tablet applications becoming widely used?  Can activity be expanded by promoting certain activities or applications?
  • What traits, characteristics, or identifiers are useful in segmenting and targeting the small business card market?  Are behavioral variables – such as monthly card frequency or volume – useful for designing and implementing strategies and tactics?

Research Issues

  • It seems the small business card market becomes increasingly more competitive and complex with each passing year.  Providers aggressively compete for a share of this market including credit cards and debit cards.  How do these card products fit together in a card product line?  Should they be promoted individually or as a combined payments solution?  Many of the current strategies in the small business card space have been adapted from the consumer market.  Rewards – including travel discounts, airline miles, cash back rewards, and merchandise points – are key features, as well as extra services such as purchase protection and travel and emergency services.  Are there particular business-oriented rewards that have appeal to small businesses?
  • Many issuers also promote premium or prestige business credit cards, which have the added benefit of fee revenue.  Usage of business debit cards is growing, but still lags behind usage in the consumer market.  How can providers spur increased business debit usage?
  • Account management is an important aspect of any card program.  What account management features are most needed by small businesses?  The exploding popularity of the mobile channel has unleashed a variety of potential applications for small businesses – from account access and alerts to point-of-sale applications.  To what extent are these new mobile services being adopted by small businesses?  It is essential for issuers to have a clear understanding of the card market from the small business owner’s perspective.  This study examines small business usage of business credit and debit cards, as well as reaction to reward programs, account management options, specialized services, and mobile apps and innovations. [F247]

SMALL BUSINESS CHANNEL DYNAMICS (June 2016)

Blending High-Touch with High-Tech

Branches, ATMs, Online, and Mobile

Account Management, Services, and Sales

Key Finding from the Report:

Results from SYNERGISTICS 2013 study, Optimizing Small Business Channels, found that branches, PC online banking, and ATMs were the top channels being used by small businesses. To what degree has this picture changed?  Has usage of mobile and tablet banking grown among small businesses?

F243 Prop Graphic

Highlights of the Study

This study examines small business usage of various channels including the branch, ATMs, online banking, and mobile banking.  In addition, the response of small businesses to various innovations such as tablet banking, self-service options at the branch, and remote deposit is evaluated.

 

National Internet Survey – 600 small business owners/executives – 150 in the following sales volume categories – $50K-$99.9K, $100K-$499.9K, $500K-$999.9K, and $1M-$5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

March 25, 2016 – Charter fee/Intro pricing ends.

March 25, 2016 – Final acceptance of comments on questionnaire.

June 2016 – Project Report available.

Strategic Questions

  • What patterns or changes in channel behavior among small business customers must providers identify and respond to in order to meet the needs of this important customer segment? Has usage of various channels increased, decreased, or remained unchanged in the past year?  How important are channel issues in selecting a financial provider?
  • What should be the position of the branch in channel strategies to serve the small business market? How frequently do small business owners or employees visit branches and what types of branch staff do they contact?  Can certain types of functional or staff improvements better optimize branches to meet the needs of small businesses?
  • What role do ATMs have as a channel used by small businesses to conduct financial activities or access accounts and services? Can the position of ATMs be enhanced with more advanced functions or services?
  • Where should primary emphasis be placed for future online channel strategies and tactics? Can PC-based online financial activities be improved or enhanced to better serve the needs of small business customers? Is usage of mobile devices – including both mobile phones and tablets – impacting the online financial behavior of small business customers?
  • How are other technological developments impacting channel behavior among small businesses? Is remote deposit capture (RDC) gravitating toward a PC-based or mobile activity?  Are mobile card readers – for both mobile phones and tablets – gaining traction in the small business market?  What types of mobile apps will best serve the small business market?
  • What channels should be prioritized for conveying marketing information to small business customers and acquiring new accounts? Does this vary by the type of financial product?  Does social media have a role in this process?
  • Does the usage or preference for certain channels among small businesses lend themselves to segmentation and targeting strategies?  What types of identifiers or variables – such as annual sales volume, industry segment, or number of employees – are most useful for this purpose?

Research Issues

  • Small businesses now have a myriad of channels they can use for their financial activities – from the branch and ATMs to PC, mobile and tablet banking.  Long been known as heavy branch users, small businesses’ usage of online banking and bill payment has progressively grown over the years.  Now, PC and mobile service offerings have expanded in response to this increasing need. To what extent has their usage of online banking expanded beyond balance inquiries and simple transactions to encompass more sophisticated account management, customer service, and account opening?  Have mobile banking and tablet banking become more than emergency channels for small businesses on-the-go?
  • In an effort to blend the personal touch with the convenience of online channels, some providers have implemented small business networks via their websites or have a presence on social media sites.  To what extent do small businesses tap into these resources? Although online and mobile channels have grown in popularity in the small business market, the branch continues to be a pivotal element in the channel mix.  How has small businesses’ usage of the branch changed in response to their increased usage of online and mobile channels?  What activities remain “branch-locked” for small business customers?
  • Another important channel for small businesses is the ATM or financial kiosk.  How are these self-service options being used by small businesses?  With all of these alternatives available, how important is the human or personal element in the channel mix? Are specific channels seen as primary modes for account management, customer service or sales? Understanding the dynamics of these various channels in the small business space will be key in optimizing channel strategies. [F243]

OPTIMIZING SMALL BUSINESS CHECKING (Feb 2016)

Acquisition, Retention, and Cross-Selling

Pricing and Rewards

PC and Mobile Access

Key Finding from the Report:

Results from SYNERGISTICS 2014 study, Revitalizing Small Business Checking, show there was a significant degree of volatility in the small business checking marketplace during the previous two years.  How can your organization attract and retain small business checking relationships?

F240 Prop Graphic

Highlights of the Study

This study examines small business checking account usage patterns, selection factors, and online service needs.  Response to relationship strategies and innovative services such as remote deposit capture is measured as well.
National Internet Survey – 600 small business owners/executives – 150 in the following sales volume categories – $50K-$99.9K, $100K-$499.9K, $500K-$999.9K, and $1M-$5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

November 20, 2015 – Charter fee/Intro pricing ends.
November 20, 2015 – Final acceptance of comments on questionnaire.
February 2016 – Project Report available.

Strategic Questions

  • What is the overall checking account activity profile of small businesses and how should providers respond to this in positioning the product? Do small businesses view checking as the “core” to financial relationships or something less important?  Is interest checking becoming a factor in the market?  Is there a segment of small businesses not using checking and can they be converted?
  • How should providers approach the pricing of small business checking accounts?  How are accounts currently priced – in terms of fees, charges, or balance requirements?   Are small business customers receptive to fee waiver requirements?
  • Can providers leverage the checking account relationship to expand financial relationships with small business customers?  What other business accounts and services are held with checking providers?  How effective have onboarding and other cross-selling efforts been for additional account acquisition?
  • Is there potential for using relationship pricing to enhance the small business checking relationship?  To what extent does this exist – on a service by service basis and in more formal packages?  Should providers place emphasis on developing small business packages as a relationship strengthening and share-shifting tactic?
  • What features or benefits – in terms of relative importance – should providers promote to capture small business checking relationships?  What factors or criteria have driven recent openings and closings of small business checking accounts?
  • How can providers increase or expand online activity?  How are small businesses accessing their checking accounts online – PCs, mobile phones, or tablets – and what activities are they performing? Is small business usage of remote deposit capture growing, and is there a preference for PC-based or mobile RDC?
  • How should providers segment and target the small business market so as to match customers with the most appropriate checking product?  Which variables and identifiers – sales volume, type of industry, number of employees, or other business measures – might be most effective?

Research Issues

  • Small business checking accounts are the core of small business relationships.  They are a key source of deposits and can represent a launching point for multiple service usage through onboarding and cross-selling.  Many strategies and tactics can be used to attract small business checking relationships such as packages, relationship pricing, rewards, and incentives.
  • Do reward programs enhance and add value to the small business checking account product? How widespread is experience with checking-based rewards? Small business checking packages and sweeps may be effective relationship building tools.  In today’s low rate environment is interest checking still a viable option or are sweep accounts a more appealing alternative for small businesses?
  • Debit cards, although increasing in usage among small businesses, have yet to achieve the level of success they have had among consumers.  Can rewards lead to increased usage of business debit cards?  Remote deposit capture is also growing in usage and can represent a new source of revenue.  Online PC account access and management has virtually become a traditional method, and mobile and tablet applications may be growing in importance in this market.  SYNERGISTICS latest survey will examine the market for small business checking and assist providers in developing and fine-tuning small business checking programs. [F240]