TROY, Mich.— Small business owners are feeling the strain of a weakening economy and looking to their banking partners for help, but very few are receiving an “exceptional experience,” according to a new report from J.D. Power.
According to J.D. Power’s 2022 U.S. Small Business Banking Satisfaction Study, half of small businesses nationwide are now classified as “financially unhealthy,” and although 76% of those businesses are interested in receiving financial advice from their bank, just 15% receive comprehensive advice.
“Small business owners are staring down an increasingly ominous set of challenges that include everything from lingering supply chain issues to inflation to a talent scarcity, and they are looking to their banks for guidance on things like available credit, tips to reduce fees and technology that can benefit their businesses,” Paul McAdam, senior director of banking and payments intelligence at J.D. Power, said in a statement. “This scenario presents an enormous opportunity for banks to deliver comprehensive advice that takes into account a full understanding of the company’s business goals and shows real, committed partnership. Right now, most small business banking customers are receiving only transactional advice or are receiving no advice at all from their bank.”
Key Findings
According to J.D. Power, key findings in the research include:
- Banks missing opportunity to deliver comprehensive advice. J.D. Power said it evaluates the small business banking advisory experience on a continuum from transactional to constructive to comprehensive based on the bank relationship manager’s overall responsiveness, understanding of the client’s business, and the bank’s fulfillment of the roles of a trusted advisor and partner. “Currently, just 15% of small business banking customers are receiving comprehensive advice, while 27% are receiving constructive advice and 58% are receiving transactional advice,” the company said. “Overall customer satisfaction among customers who receive comprehensive advice is 858 (on a 1,000-point scale), which is 82 points higher than among those who receive constructive advice and 195 points higher than among those who receive transactional advice.”
- Relationship managers play a key role. The biggest factors influencing small business banking customer satisfaction are trust and people, both areas where bank relationship managers play a key role of explaining fee structures, resolving problems and providing advice, J.D. Power said. “In the eyes of small businesses, bank relationship managers who provide operational advice fulfill these roles but fall short of being viewed as a partner who acts with the company’s long-term interests in mind and helps the company grow,” it stated.
- Small businesses feeling the strains of a weakening economy. J.D. Power said it found just 50% of small business banking customers are classified as financially healthy, while 25% fall into the cash- or capital-constrained category and 25% are in the financially vulnerable category. “Some of the biggest factors influencing the financial health of small businesses are inflation (60%), supply chain disruptions (44%) and talent retention/acquisition (36%),” the company said.
- Key pain points. Top areas where small businesses are seeking advice from their banking partners include practical guidance on ways to reduce banking fees; tips to help improve the business’s financial situation; and understanding how the bank’s technology can benefit the business.
Study Ranking
J.D. Power said Citi ranks highest nationally in small business banking customer satisfaction with a score of 706. Capital One (701) ranks second and Union Bank (691) ranks third.
The 2022 U.S. Small Business Banking Satisfaction Study includes responses from 6,855 owners of—or financial decision-makers at—small businesses that use business banking services. The study was fielded from May through August 2022.
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