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Industry Insights

Blurred Lines Between Business and Personal Banking Creates Opportunity

Small Business Banking

Small business banking is the new battleground for financial institutions, as many seek to ramp-up revenue by focusing on these often-under-served assets. 

The push comes as small business undergoes some major changes — from the owners themselves to the sought-after account features to the diverse set of players in the space. This small, yet mighty facet is creating major opportunities, as well as some considerable competition, for banks and credit unions. 

The Lure of a Small Scope

Small to micro businesses account for more than half of all deposits and loan balances in the U.S. With a favorable economic environment and small business optimism hitting an all-time-high — this niche’s profitability is only poised to grow.

This comes as owners scramble to find a user-friendly small business banking experience. Javelin Strategy & Research reports only 39 percent of small businesses have full-time bookkeeping or accounting staff. Owners often do the leg work themselves, which results in reduced productivity and an increased risk of error.

Today’s Small Business Owner

So, who are these optimistic, account-intermingling entrepreneurs? Well they’re certainly not the team of Mark Zuckerberg prodigies Hollywood’s been selling us. Quite the contrary in fact…

  • Half of small business owners are over 50 years old1
  • Women owned businesses grew at 5x the national rate2
  • Sole proprietorships grew at 5x the rate of traditional firms3

It’s important to note that many small business owners are preparing to retire and millennials are likely to fill their roles. Although very different, they will all share a common core — they’re business is their life. They’re searching for a small business banking solution that emulates this shared belief. And it shows in their wish list of small business banking account features.

Top Small Business Banking Account Features

On-the-go banking and a dual-view of personal and business finances are top-of-mind for small business owners.

Javelin also reports 50 percent of small business owners prefer to view their personal accounts alongside their business accounts in online banking portals. These multi-taskers also want this dual-view to follow them wherever they go with mobile access.

It’s no surprise, as mobile banking adoption has skyrocketed among small businesses. Sixty-two percent were using mobile banking for business in 2016. Despite the high adoption, few are satisfied with current mobile offerings. Seven in ten have a negative view of mobile banking, citing poor usability.

This need for a streamlined, mobile and multi-view experience is nothing new. Providing your business accounts with flexible financial tools can only strengthen your relationship.  Consider including EZShield as part of your overall solution strategy for meeting the expectations of your business accounts. At EZShield our small business identity protection products are driven by this entrepreneurial spirit.

So much of an owner’s personal and financial information is tied to their business, creating major security concerns that can jeopardize not only their identity but their livelihood. That’s why offering user-friendly, all-encompassing products is something EZShield prioritized when delivering these value-added solutions to business account holders. And like with any sensible solution, if you’re not willing to offer what the account holder wants, someone else will.

FinTech: Friend or Foe?

Fintech has already acted on these insights; revolutionizing small business lending in the process. It’s only a matter of time before these flexible, user-friendly solutions make the jump to full service banking.

Thankfully, there’s good news. While the lure of FinTech is undeniable, there’s a major deal breaker for small business owners.

As we’ve already discussed in-depth, business owners like to keep their personal and business finances together. (In fact, 81 percent of self-employer and small business owner hold business accounts with the same financial institution they hold their personal accounts.) This means banks and credit unions should have an easier time prospecting, as long as they set their net close to home. This is also a major loss for FinTech as few have pre-existing consumer banking relationships.

This close-to-home approach will capture your high-value, account-intermingling small business owners (who earn an 11 percent higher average income, plus hold 40 percent higher personal assets) as well as retain your personal banking account holders — strengthening relationships. But be warned, a poor experience can end up threatening your consumer banking relationships too.

Ultimately FinTech is far from a foe; they can be an indicator of what’s ahead in the field as well as a source of inspiration — especially as you map out new offerings.

Where is Your Focus?

With all of these changes in the small business banking space, it leaves many financial institutions questioning what they’re next steps should be. While the path will certainly be different for all, keeping the focus on accessibility and usability should always be your guiding light.

Schedule a demo to explore how EZShield drives these values hone in our low-cost, high-value small business offerings.

What’s on your agenda for your small business account holders? We’d love to hear what’s top-of-mind for your small business account holders. Share your story in the comments below.

1. Small Business Administration, 2016
2. US Census/Amex Open, 2016
3. Brookings Institute, 2014

About Laura Bruck

Laura, former VP of Marketing at EZShield, now a Sontiq brand, is a marketing professional with over 20 years of experience leading marketing and supporting sales to develop partner solutions, transition to new markets, and achieve significant revenue growth.

2 Comments

  • I didn’t know that 81% of self-employers and small business owners bank with the same financial institution they have their personal accounts with. While this may be convenient I feel like a bank used for everyday services won’t be quite as well equipped to handle the demands something like a business may provide. I think that finding a business banking service would be a better idea so you can know that the money you are putting in will be taken care of like a business’ should be.
    • I couldn’t agree with you more Kylie. It’s a real eye-opener to the opportunities financial institutions have and the need to push owners to dedicated banking products. Thanks for sharing your insights!

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