Description
Small businesses offer attractive revenue opportunities for banks. Practically all businesses need some form of basic banking services — like checking accounts and credit cards — that resemble those of retail consumers. For banks that offer additional business-oriented services, revenue opportunities grow alongside the small businesses as they tackle their evolving needs, from loans to payroll and retirement programs.
Historically, banks have enjoyed two advantages in the attraction and retention of small business clients: a high level of trust and a strategic moat around the core financial services they provide. Those advantages are fading. Competition from both fintech startups and big tech has forced banks to work harder to earn the trust of small business clients and address key areas of need.
Those needs are not always apparent to a small business owner at the outset. A sole proprietor looking for a banking relationship may not be thinking about things like payroll services or setting up a retirement program initially. Over time, and particularly as the business grows in size, those needs become increasingly apparent. Every new service represents an additional revenue opportunity for banks that have appropriate offerings. For those that don’t, those opportunities become introductions to potential competitors.
In this report, based on American Banker’s Small Business Banking 2024 research, we look at what banks are offering small businesses and where they’re falling short. We also dive into the attributes that improve trust in financial institutions, along with key performance indicators banks can track to assess levels of trust as they address this dynamic market.
Topics within the report include:
- Bankers’ confidence level in delivering key aspects of trust
- Areas where banks appear to be overestimating their effectiveness
- The types of partners small businesses rely on to meet their business needs
- How small business owners view the importance of integrated, value-added services
