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Small Business Needs Big Banking

Developments have been lagging, but banks now see ways to provide more value

The impact of the pandemic and advances across digital banking have encouraged small businesses to be more discerning about the platforms they use. Indeed, digital solutions are now key priorities in their strategic deliberations.

27 %
of businesses say that leading online and mobile capabilities is most important for their company when selecting a primary bank (up from 21% in 2018)

Source: Curinos Customer Knowledge | 2021 Business Banking | n = 2,390

Banks are racing to meet these demands: 530 changes were made to digital user experiences in 2021. But while businesses were able to view balances more easily, make quick and easy online payments or manage their card controls from digital channels, most of the changes were focused on personal banking upgrades rather than the small-business segment. When reviewing digital changes by journey, it is clear that the vast majority of digital developments last year weren’t launched with business needs or requirements in mind. The majority of the changes for payments, login and transactions have centred around UX improvements rather than the complexities inherent in the banking needs of small businesses.

Digital developments by journey

Some financial institutions are starting to reassess how they service business customers online, however. These providers understand businesses have needs that extend beyond current online functionality and include cashflow management, payroll systems, invoices, expense reporting and tax support.

Square, for example, combines merchant services with banking data to provide a more comprehensive overview of business activity. On a singular interface, users can view balances, spending and sales data, the transaction feed, payroll activity and invoice statuses. Alongside this information users can also view their terminal data including customer activity, average customer spend and sales traffic.

A consolidated picture of business activity and financials can support existing and future business decisions. A business can use this data to structure new marketing campaigns, build loyalty programs and predict upcoming cashflow.

Bank of America has created a new business marketplace entitled Connected Apps on its web platform that enables users to link to a variety of third-party products and services – such as accountancy software, expense management services, payroll and analytics software – onto a dashboard. Once a solution has been connected, users can view key insights and information from the third party within one interface.

Financial tools used by businesses

Source: Curinos Customer Knowledge | 2018 & 2021 Business Banking | 2018 n = 2,414 | 2021 n = 2,390 Q 51. Which of the following types of financial tools (e.g. software), if any, does your company use today?

By hosting the data connections within the platform, banks have significant opportunity to build stronger and more meaningful client relationships. Businesses will increasingly use these banking platform as a hub to view and manage their activities over competitive platforms. Simultaneously, banks will have access to more granular customer data, providing the ability to deliver more informed advice and enhance prospects for cross sell.

Tide Bank, a digital challenger bank based in the UK, is already testing how it can use customer data to provide more bespoke, contextually relevant services to business customers.

A new Cashflow Insights service uses both internal and external account data to provide cashflow analysis and spending insights. In addition, a balance prediction enables users to view a forecast of cash over 30 days, providing advance warning of any cashflow problems.

Invoicing services outline the probability of payments paid made on time and what impact it will have on cashflow projections. Recommendations aim to support businesses offset any shortfalls, including setting up automatic invoice payments and opening credit products from either Tide or third-party partners.

This level of data allows the bank to support the customer at the right time, providing personalized, contextual and relevant products to the user.

Data is the next step to unlocking value for small business customers. The race is already on to capture the full business relationship, digitally.

Rory will speak about the evolution of small business banking at CBA Live, March 7-9, 2022, in San Antonio, Texas. He will be joined by Olivia Lui to discuss how dramatic shifts from physical/in-person models to digital convenience are creating a new business banking opportunity. To ask him a question prior to the event, email him.

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