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US Small Business Banking trends

7th January 2021

Kevin Claypoole-McCloskey

Managing Director

These five trends will impact US business banking this year. Here’s how to harness them.

1. Opening the door

According to Accenture, more than 30% of small businesses use open banking, and that trend is expected to continue, adding 10% more organic growth over the next 3-5 years.1 This open API-driven model, which allows several providers to connect on the back end with a seamless interface, could change the face of small business banking as digital transformation progresses. In fact, open banking is expected to have 40 million users by next year.2

What this means for marketers:

Keep in mind the multiple-provider model of open banking when considering how to approach the small business market.

2. Rising to the challenge

For many small businesses across the US, 2020 was about trying to ensure their business survived the pandemic. And as the JD Power 2020 US Small Business Banking Satisfaction Survey3 found, few things were more important to that goal than the government’s Paycheck Protection Program (PPP). Among small business banking customers, 36% applied for those PPP loans through their primary bank, presenting banks with a unique opportunity to improve satisfaction, trust, advocacy and retention. What’s more, dedicated account managers helped drive higher satisfaction rates.

However, rising to the challenge looked different to separate segments of the small business banking population. Larger small businesses (>$2.5 million in annual sales) saw satisfaction rise, while smaller business owners saw a decrease in satisfaction.

What this means for marketers:

As banks work to improve the customer experience for smaller small business customers, marketers can help enhance that experience with full-funnel strategies that employ content strategies that engage and contribute to higher scores around satisfaction and trust.

And the larger end of small businesses could also benefit from a tighter, more coordinated content strategy to bring those scores even higher.

3. Give me four traits

According to a recent Accenture research report4, banks that can successfully serve small to medium enterprises (SMEs) will likely bear four key traits: empathy, responsiveness, focus and efficiency. While the SME segment can be difficult to serve, it remains a strategically important one to banks.

To effectively serve these customers, banks need to be proactive, trusted and purpose-driven in their engagements. They also need to comprehensively understand their customers’ needs and be responsive. And banks’ propositions need to be accordingly personalized with seamless propositions that are efficiently delivered to customers via technology that creates significant value for the customer.

What this means for marketers:

The banks’ value proposition needs to be clearly articulated and supported by a clear and authentic purpose. This is something marketers are well positioned to help small businesses with. Bankers need to be able to take full advantage of combining the personal touch with the technology touch. This is another area where marketers can help connect the two through journey mapping and supportive content that illuminates solutions for small business customers.

4. The fintech effect

Things are no different for the small business segment. ‘Nonbank’ competitors such as fintech firms, are increasingly filling an unmet need for small businesses. According to Forrester research5, digital banking services for SMEs have lagged those for retail customers for several years now. Despite running businesses from their phones, a minority use them for banking transactions for their business6. The risk for conventional banks not offering more mobile feature – such as foreign exchange or merchant services – is not only loss of market share but also disintermediation risk.

What’s more, a recent JP Power survey found that 42% of SME businesses think alternative providers – such as fintechs – could deliver better service than traditional banks7.

What this means for marketers:

Engaging content and a comprehensive content strategy are integral components of the marketing strategy for any conventional bank looking to stay relevant with small business owners.

Perhaps more importantly, banks’ proposition for this important segment needs to be crystal clear and laden with value, so that customers understand a bank’s commitment to mobile. And for fintech marketers, engaging content, strategy and proposition is key to continuing to appeal to small business owners and to grow market share.

5. Know the ecosystem

Few brands are more familiar to US small business owners than Intuit, for QuickBooks, and Square, for that famous little wireless device that plugs into your mobile device to take payments. So one is an accounting/bookkeeping ecosystem, and the other is a payments ecosystem. As these brands have become entrenched with the core financial operations of SMEs, they have found opportunities to expand services within the ecosystem, in areas where more conventional banks are underserving the segment8.

For example, Square now provides lending through Square Capital. Intuit is also now expanding its credit and deposit/payment functionality. Conventional banks may be underestimating these competitive threats and overestimating their own customer loyalty.

What this means for marketers:

For bank marketers hoping to retain or grow SME clients, articulating your value clearly is critically important at a time when nonbank competitors are gaining market share. Take a disruptor approach and remember the strengths of your organization and your business model to counter threats from ecosystem-based competitors.



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About the author

Kevin Claypoole-McCloskey

Managing Director

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