The small business has traditionally been the forgotten child amongst banks. In many cases, the type of service and products offered to small businesses are the same solutions offered for those of a larger size.
Small businesses should perhaps be treated more similarly to everyday consumers, as they too have limited knowledge in banking and accounting and have a preference for simple, digital, and fast solutions. Although, it is important to find the middle ground between a consumer and small businesses, as they have a need for more features within their banking products and a higher need for personalization and engagement.
The goals of a bank, when it comes to small businesses should, therefore, be a truly unique offering that helps to guide them in the right direction, alert them when cash flow is diminishing, and offer timely advice and access to quick finance when they need it. Being able to accomplish this generates a higher level of satisfaction, trust, ongoing engagement, and customer entanglement.
The truth is, however, that many small businesses are not satisfied with the service and experience offered by their banks. In Australia, for example, banks only score an average satisfaction level of 26.8 out of 100 within the Business Banking Index. In the U.S, only 22.3% of small business customers are extremely satisfied with their banks and, in the U.K, 37.5% of small businesses are not satisfied with their banking experience.
While banks may be aiming to improve the way in which they deal with their small business customers, the lack of customer engagement, and perhaps not having the right technology in place, is causing an obvious shortfall in expectations.
Common Banking Issues Faced By Small Businesses
For many small business owners, necessary banking tasks are considered to be unengaging and relatively unimportant in their day-to-day activities. They may also often see themselves as more of a powerless figure in their relationship with the bank, rather than a customer of whom the bank is serving. This disconnect continues in the person-to-person relationship as they may feel untrusting of a bank advisor and turn instead to their external accountant, friends, or family for advice.
Additionally, many small businesses do not truly understand what their banks can offer them while, on the flip-side, banks often do not fully understand them either. To an SMB, choosing a bank may seem trivial because most seem very similar in terms of their products, service, credit policies. This leads to the belief that they will get the same service from any bank they choose.
Common Banking Needs Of Small Businesses
Similar to the banking issues they face, their banking-related needs also differ from those of larger businesses, while also varying from one small business to another. Some may want simple bank services that are fast and inexpensive, while others may want a more close and personal contact with their bank.
Whatever variance there may be, the needs can often fit within these four categories – Support, Time, Funding, and Tailoring.
There are a large number of small business entrepreneurs who do not have a business education or prior experience in accounting and finance. It is not uncommon for them to not have a dedicated team member to handle day-to-day banking activities and instead, take care of it themselves. As such, guidance and assistance is a big deal, particularly in the early stages of the business. This help is seldom available from their bank due to limited engagement activity stemming from a lack of borrowing by the small business, positioning them as a lower priority in the eyes of their bank.
More time, effort, and support is often prioritized to those who borrow larger sums and more more of a regular interval.
Time is money for a small business. Long work hours and tight schedules leave very little room for time-consuming operations. Time spent on day-to-day banking is limited, and when contacting the bank, a small business wants quick replies and results on their requests or, better yet, proactive management.
Although desirable, this rarely happens. Many banks are not properly fit with the technologies or processes required to meet these needs. However, cloud-based software and platforms could be the answer, by speeding up the process, digitizing the banking process for small businesses, and offering deeper insights by the bank into the activity, performance, and finances of business customers.
Despite these differences, there is a larger need to quickly access information about financing possibilities and also for an understanding of how these funds can be of help.
It is important for small businesses to have products and services that tailor to their specific needs. Achieving such a tailoring required a strong relationship with the bank and a solid understanding, from the banks point of view, of what the small business is and does.
Language and communication may need to be tailored while individual products and terms may require adjusting on a case-by-case basis to accommodate varied needs. Most of all, this represents the need for the bank to actually know who each of their small business customers are and work together to ensure the businesses success.
Competition From FinTech Startups
Financial Technology companies have recognized the gap between the problems and needs of small businesses against the traditional banking service offerings. They are filling this gap, aggresively, by focusing their efforts on user experience and combining the engagement of their customers with cutting-edge technology.
FinTechs are challenging traditional banks today by offering financial services in new ways, backed by technology that revolutionizes the way small business bank. Adopting new technology, improving processes, and increasing customer engagement is the way forward for banks wanting to remain competitive and relevant in today’s world.
How Maestrano Helps Banks
Maestrano helps banks to remain relevant in the evolving world of small business banking. Through a branded open cloud integration platform, banks can offer a new and personalized value-added service to an existing suite of banking tools.
Such a platform facilitates new revenue streams, vastly increases engagement and retention, increases knowledge of customer context and behavior, and establishes a new distribution platform for digital products.