LOMBARD, Ill.—More small businesses are turning to mobile to manage day-to-day operations, according to a new report that suggests it would be a mistake for financial institutions to respond by simply offering consumer mobile solutions to businesses.
Raddon Financial Group’s Fall 2015 Small Business National Research report reveals that nearly half of small businesses are using mobile to add a new dimension to their operations, including on-the-go approvals and decision making. And as the size of the small business increases, so does the likelihood the business is using mobile banking, the report shows—58% of small businesses with annual sales from $500,000 to $10 million are using mobile banking.
“Businesses, especially firms led by people who aren’t often behind a desk, need advanced mobile functionality,” explained Raddon Financial Analyst Marcus Rothaar in the latest edition of the Raddon Report. “Simply repurposing consumer mobile solutions for business use misses the mark. In addition to account information, funds transfer and remote deposit, businesses have unique cash management and security needs, including requirements for multi-user entitlements, payment approvals and advanced authentication capabilities.”
When decision-makers are away from their desks or out of the office, comprehensive banking capabilities, alerts, and reporting and payment functionality keep business moving, explained Rothaar.
“Notifications let decision makers know when transactions – ACH, wires, positive pay and internal transfers – need approval. User credentials and entitlements carry over to mobile banking for added efficiencies.”
Financial institutions that meet the unique needs of digitally connected businesses stand to realize several key benefits, including greater profitability from commercial accounts, stated Rothaar.
“For example, Raddon found businesses that use mobile banking have more business deposit and loan accounts at their primary institution and are more than twice as likely to seek a loan in the coming year, compared to businesses that don’t use mobile,” Rothaar said. “Businesses that use mobile banking are also more optimistic about future growth; 70% expect growth in the coming year, compared to 49% of businesses that don’t use mobile banking.”
In addition, mobile business banking influences attrition, explained Rothaar.
“Commercial clients, especially younger ones, are looking for the convenience and 24/7accessibility provided by mobile banking – and are willing to go elsewhere to find it. Mobile banking is used by 66% of Millennial-led businesses, and 58% of firms led by members of Gen X. Forty-one percent of Millennial-led businesses indicate they would not use a community bank due to a perceived lack of online and mobile banking functionality. Of Millennial businesses that don’t use mobile banking, 22% cite the lack of available functionality within their financial institution’s mobile banking platform. These results point to an opportunity for greater market share when increased mobile banking functionality is offered.”
Commercial accountholders are looking for mobile banking solutions that mean business, Rothaar said. According to the report, a third of small businesses use mobile apps designed specifically for business banking.
“The size of the business – and by extension, the depth of technology and functionality needs – greatly influences whether a business uses a business-specific app,” said Rothaar. “Forty-five percent of businesses with sales from $2 million to $10 million use a mobile business app, compared with only 18% of firms with sales under $100K.”
Fifty-seven percent of businesses enrolled in mobile banking use both smartphones and tablets. Of this group, half access mobile banking more frequently with their smartphone, 30% are more likely to use a tablet, and 19% use both devices equally, the study shows.
“While the type of interactions conducted often vary by device, digital banking users expect consistency across the many channels they use – preferring the same accounts and account information displayed, the same passwords and preferences used, and the same look and feel,” said Rothaar.