LOMBARD, Ill.–When it comes to deciding whether to use a financial institution’s services, small business customers of major banks were the most likely to cite technology as a factor in the decision, according to new analysis released by Raddon.
The same analysis has also identified opportunities in the small business category for smaller institutions, such as credit unions.
Among small business customers that use a major bank as their primary financial institution (PFI), 66% indicate the technology resources available at the institution influenced their decision to use the bank, with 29% saying it strongly influenced their decision. Small businesses with a credit union as their PFI also showed a significant interest in technology, with 42% saying technology influenced their decision and 16% saying it was a strong influence, the Raddon research found.
Although 91% of small business customers still make branch visits in a typical month, technology is starting to reduce branch traffic, according to Raddon Research Insights. Forty-two percent of small businesses indicated they now use branch lobbies and drive-ups less frequently due to the availability of online banking, mobile banking, and remote deposit. Looking forward, one in three small businesses (36%) think technologies such as mobile and online banking could potentially replace their need for a branch office of their PFI near their place of business, Raddon reported.
Winning Small Business Customers
While major banks currently control the small business market with 68% of primary financial institution relationships, there are opportunities for community based financial institutions to serve more small businesses, with small business owners indicating a likelihood to work with such institutions in the future.
Over 50% of small businesses that currently do not use a community bank for their primary or secondary institution said they were extremely or very likely to consider using a community bank in the future, and 38% said the same for a credit union.
The research in the Raddon Research Insights: Winning Small Business Customers study was gathered from semiannual surveys conducted in 2014, 2015 and 2016. Each survey of approximately 1,200 small business owners was conducted via an online questionnaire administered through a national online panel of small businesses, with respondents qualified by having decision-making responsibility for financial services for their company.
An Executive Summary of the research is available at https://fisv.co/raddonsmallbizinsights and the full 49-page report can be purchased at raddon.com. Raddon will host a webinar on the study on June 8, 2017 for purchasers of the report.