Product Type: Market Research Report
Published by: Javelin Strategy & Research
Published: August 2009
Product Code: R3424-96Description There are more than 26 million small businesses in the U.S., but ”under-banked businesses” tend to be overlooked and underserved by most banks. Under-banked businesses (UBBs) have not yet established a business banking account: they hide in the consumer banking platforms, possibly paying lower account maintenance fees, but eventually needing specialized services, such as payroll, remote capture, and credit products to grow. Under-banked small businesses, like under-banked consumers, tend to be cash and asset-poor, but successful firms will grow into highly profitable small “banked” businesses (small businesses with a business bank account). Due to the challenging economic environment, financial institutions must innovate and refine their business strategy in order to help small businesses survive and expand. By marketing to and servicing UBBs, banks and credit unions can deliver value-added features and services that help these firms compete and grow into a mutually beneficial relationship.
Primary Questions
- How are under-banked businesses (UBBs) and small banked businesses fundamentally different than other online bankers?
- How do under-banked businesses and small banked businesses differ in their banking behaviors from other online bankers?
- How should banks or credit unions refine their small business banking offerings? What additional services or features do they need?
- What indicators should banks look for to identify underbanked businesses “hiding” on consumer platforms to market a more mutually beneficial banking relationship?
- How valuable are small banked businesses and underbanked businesses to FIs? Increased deposits? Greater financial product ownership? How many comprise this segment?
Table of Contents - Overview
- Primary Questions
- Findings and Analysis
- Methodology
- Defining Under-Banked Business
- Two in Three Small Businesses Found in the Consumer Platform (Under-Banked Businesses)
- Earning Consumer Trust
- Small Business Owners Carry More Balances
- Small Business Owners Invest More Heavily
- Small Business Owners Demonstrate a Greater Need for Credit Products
- Small Business Needs = Opportunities for Financial Services
- Transfers Help Identify Potential Small Business Bankers
- Revenue From Expedited Payments
- Remote Check Deposit
- Online Banking and Bill Pay Have Room to Improve
- Small Businesses More Often Pay Bills Directly at the Biller
- Small Business Owners Demonstrate Increased Loyalty When Opening Accounts Online
- Why Do Small Business Owners Change Financial Institutions?
- Fees, Poor Customer Service and Branch Access Provide Impetus to Switch
- Business Credit and Debit Card Strategy
- Higher Need for Alerting Capabilities
- Social Networking Builds Small Business Communities and Web 2.0
- iPhone as a Versatile Tool for Under-banked Businesses
- Profile: Wells Fargo
- Appendix-Additional Charts
- Related Research
- Companies Mentioned
- Table of Figures
- Figure 1: Under-Banked Small Business Segment “Grows” Consumers Into Small Banked Businesses
- Figure 2: Small Business Owners - With Business Account vs. Without Business Account
- Figure 3: Financial Product Ownership (UBB vs. Small Banked Business vs. All Consumers)
- Figure 4: Transfers by Method in the Past 30 days (UBB vs. Small Banked Business vs. All Consumers)
- Figure 5: Expedited Payment Usage (UBB vs. Small Banked Business vs. All Consumers)
- Figure 6: Desirability of Remote Capture (UBB vs. Small Banked Business vs. All Households)
- Figure 7: Online Banking and Bill Paying Last 90 Days (UBB vs. Small Banked Business vs. vs. All Households) . 18
- Figure 8: Online Account Opening Loyalty by FI Customer (Small-Businesses vs. All Consumers)
- Figure 9: Reasons for Switching Financial Service Providers (UBB vs. Small Banked Business vs. All Consumers)21
- Figure 10: Use of Credit Card Last 90 Days As Affected by Economy (UBB vs. Small Banked Business vs. All
- Households)
- Figure 11: Alerts Received in the Past 90 days (UBB vs. Small Banked Business vs. All Households)
- Figure 12: Marketing Payment Acceptance (and Merchant Services) to All Consumers
- Figure 13: Screenshot of Wells Fargo Small Business
- Figure 14: Last Visited Branch (UBB vs. Small Banked Business vs. All Households)
- Figure 15: Account Ownership by Income (UBB vs. Small Banked Business Owners vs. All Households)
- Figure 16: UBB vs. Small Banked Business Ownership by Age
- Figure 17: UBB vs. Small Banked Business Ownership by Gender
- Figure 18: Technology Product Ownership (UBB vs. Small Banked Business vs. All Households)
- Figure 19: Desired Alerts (UBB vs. Small Banked Business vs. All Consumers)
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