A new report finds commoditization has not reached small business banking in full force — at least not yet. But as the effects of technology and the rise of nonbank providers facilitate fragmentation of financial relationships, FIs will begin to see the same trend among small business customers who have propensity to switch banks.
The report, Small Business Bank Switching: Optimizing Digital Banking to Counter Commoditization, by JAVELIN, found 5% of small business owners and decision makers indicate “extreme” likelihood of switching to a new financial institution outright in the next 12 months, a figure that tracks accurately with actual churn rates.
But 8% say they are likely to maintain their primary relationship but “shift” products or accounts to a secondary FI or third-party non-bank firm — a phenomenon JAVELIN has dubbed “silent churn.
Small business decision makers considering switching banks cite fees, easier access to branches, and lower rates on credit cards as factors that could push them away, while online and mobile banking features rank highly as reasons business owners remain at their primary FI.
The JAVELIN report takes a close look at the factors that motivate small businesses to switch banks or shift accounts, and what banks can do to maximize the relationship value.
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