Gaps Grow Between Small Businesses and Financial Institutions

Increasingly small businesses don't like being pushed into a consumer banking mold. Their sophistication keeps growing and they demand that their banks and credit unions keep up. They want tailored services and premier mobile technology. They thirst for stronger financial data analytics. Be warned: About half of small firms plan to leave their banking provider or are thinking about it. A substantial portion of U.S. small businesses surveyed no longer see their primary financial institution as a partner and they don’t feel that their provider understands their needs. As a result 14% say they will definitely or probably switch financial institutions in the next two years. And 36% report they are thinking about moving, according to a study of more than 1,000 small businesses by Aite Group for Alkami. Considering how much more complex it can be to unwind a business banking relationship compared to a consumer relationship, those numbers should be sobering. That’s especially so when contrasted with a retail banking study reported by The Financial Brand in which only 5.3% of U.S. consumers said they were considering switching institutions and 16% more indicated that they were considering a move — less than half of the small business survey’s switchers and potential switchers.