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?

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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]