Online banking usage
Up until a few years ago, small business usage of online banking trailed
consumer adoption. In late 2000, 13% of small and microbusinesses used
online banking compared to 16% of consumers . Three years later, online banking penetration is similar to that of
consumers, an estimated 30% overall. At the largest small businesses, those
with sales between $5 and $10 million, usage is now more than 40%, double
the rate three years earlier.
It’s likely we’ll see continued rapid growth for a few more years. Almost
all (99%) small businesses are computerized, either at the business or at
the owner’s home, or both (see Table 18, above) and more than 75% are
using their personal computers for financial activity (see Table 21, next
page). It’s only a matter of time before the majority of small
businesses bank online. Looking at the 7.3 million small and microbusinesses
universe, we predict that we’ll pass the 50% penetration point within four
years. However, we may reach that point much sooner. One researcher,
Synergistics Research, is already saying that online banking usage
has passed the 50% mark in the $100,000- to $10-million segment, with the
largest small businesses
($5 to $10 million) topping out at 75% penetration.
Table 21
Small business online and PC financial services usage,
2002
Source: NFO Financial Services Group SOHO/Small Business Owner 2002
Online and Channel Use
Reasons for not banking online are typical, with security and
inconvenience (compared to current methods) the most-cited reasons (see
Table 22, below). Only 8% mentioned it was too expensive and only 5%
said they didn’t have the necessary equipment (presumably convenient online
access).
Table 22
Reasons for not conducting either business banking or
investing online
Source: NFO Financial Services Group SOHO/Small Business Owner 2002
Online and Channel Use
Table 23
Online banking, billing, payment and other online activities
Q. Does your company use the Internet …?
Source: NFO Financial Services Group SOHO/Small Business Owner 2002
Online and Channel Use, April 2003
Table 24
Cash Management Usage
Q. Please indicate if the service is
used?
Source: NFO Financial Services Group SOHO/Small Business Owner 2002
Online and Channel Use, April 2003
Advisor usage
While small businesses still turn to their banker for loan
advice, only 17% use a banker for cash management advice, and just 4% for
retirement planning (see Table 25, below). Because small businesses are
skeptical of bankers’ expertise in non-traditional areas, banking organizations
must first explain why they are selling the product, and why the bank’s solution
is superior to more traditional sources. It may be advantageous to partner with
brand names that are more closely associated with the non-traditional product,
e.g., Safeco for business insurance.
Regardless of the channel the customer chooses to get
information and make transactions, a human is usually needed to close the sale.
In a recent Synergistics Research survey of 600 small businesses, only 7% had
opened bank accounts remotely (see Table 26, below). The sales process
can be assisted by email and phone with a branch manager, business banking
officer, or a special small business liaison.
