Executive Summary

Winning the Battle for Small-Business Customers, commissioned by Bottomline Technologies and produced by Aite Group, explores the growing presence of technology players in the small business banking space. It identifies the products and services small businesses are most likely to pay nonbank partners for and offers recommendations to financial institutions seeking greater success with this important customer segment.

Key takeaways from the study include the following:

  • Bank strategies, product offerings, and pricing models in the small-business banking space need to evolve. Only 28% of businesses generating between US$100,000 and US$20 million in annual revenue (most of which bank with one of the four largest U.S. banks) award their primary institution the top grade for innovation. Additionally, 44% of small businesses are paying nonbank providers for financial services.
  • Banks are missing an opportunity to drive more value from this important segment. More than one-third (40%) of small businesses believe that technology providers (such as Square, Mint, and Bill.com) are more likely than their bank to offer products and services for which their business is willing to pay. This belief becomes more widespread as businesses grow in size (54% of businesses generating between US$10 million and US$20 million in annual revenue) and among those with aggressive growth plans (57%). Fifty-eight percent state that most of the products and services they use at their bank are offered free of charge.
  • Customer expectations for their banks have diminished, placing banks at risk of simply becoming deposit holders and missing out on the large potential revenue stream associated with the small-business customer segment as it continues to grow more sophisticated and technologically savvy.
  • Banks can win back small-business customers by focusing on what matters most to them: customer service, advanced fraud management, sophisticated channel capabilities and superior user experience, broader product portfolios and toolsets, and tighter integration.
  • For the purposes of this study, a small business is defined as any business generating between US$100,000 and US$20 million in annual revenue.

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