However, now that small businesses have evolved into tech-savvy customers expecting more product sophistication for which they will pay, they are a segment for an opportunity. This revenue opportunity has not gone unnoticed as non-bank offerings are on the rise to attract these customers.
To compete, financial institutions are emphasizing their unique capabilities for security, broad solutions and the ability to serve as the single-source provider for all financial needs a small business would want.
What is the small business really?
The first hurdle many financial institutions face when looking to better serve small businesses is figuring out exactly what a small business is and how to create value that resonates with this segment. Is it more like a high-end consumer? A low-end commercial business? Something else?
The U.S. Small Business Administration (SBA) uses a fairly generic definition of a small business, capping it at businesses with 500 employees or less (according to this definition, 99% of U.S. businesses are small). The SBA also says the 28 million small businesses in the U.S. today account for more than half (54%) of all U.S. sales and more than half of all U.S. jobs (55%), proving that small doesn’t always mean slight when it comes to contributing to the overall economy.