A new report from Aite Group examines the reasons that large banks are at risk of rising attrition rates and lost market share among small-business customers at a time when maintaining deposits and customers is crucial. Based on a January and February 2010 Aite Group survey of 20 of the 40 largest U.S. banks based on asset size, the report reveals that large banks are underutilizing technology, relying on transaction-based selling, segmenting their customers by size rather than need, and failing to develop a strategy for migrating small-business customers onto business banking platforms.
The revenue potential associated with addressing the financial needs of U.S. small businesses remains untapped as financial institutions struggle to understand small-business needs. While the largest banks maintain the greatest market share of this customer segment’s business, smaller community banks have increased their penetration into this space over the last few years. More than 30% of U.S. small businesses with less than US$10 million in annual revenues currently consider a community bank to be their primary institution. Among small-business customers that are disappointed with their primary banking institution, 79% are customers of large and regional banks.
“Large banks are missing the boat when it comes to effectively serving and cross-selling to small-business customers,” says Christine Barry, research director with Aite Group and author of this report. “This is evidenced by the declining satisfaction rates of their customers and their failure to meet cross-selling goals. More favorable results will require a paradigm shift in the way banks approach these customers, analyze their needs, and ultimately serve them.”
This 28-page Impact Report contains 21 figures. Clients of Aite Group’s Wholesale Banking service can download the report by clicking on the icon to the right.
Related Aite Group Research:
* Declining Satisfaction Levels Among Small-Business Customers
* Insight Into the Online Banking Needs of Small Businesses
* The ROI of Small-Business Mobile Banking
* Increasing Bank Success With Small-Business Remote Deposit
About Aite Group, LLC
Aite Group is a leading independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry. It was founded by leading industry experts in Banking and Securities & Investments. Aite Group brings together a team of business strategy, technology and regulatory experts to deliver comprehensive, timely and actionable advice to financial institutions and technology vendors. It seeks to become a true partner, advisor and catalyst by exchanging ideas with and challenging basic assumptions of its clients, ensuring that they always stay one step ahead of the competition.