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Chris Musto, Gomez, Inc.
Chris Musto, Gomez, Inc.
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How The Internet Can Help Serve Small Business Customers

Gomez's latest SOHO/Micro Banker Scorecard found that only 10 of 17 ranked banks offer prospective small business checking customers the ability to submit application data online.

Gomez's latest SOHO/Micro Banker Scorecard found that only 10 of 17 ranked banks offer prospective small business checking customers the ability to submit application data online.

This void is reflective of a market that has evolved differently on the Web than its consumer counterpart. In fact, the lack of online checking application functionality in the small business market is even more pronounced when compared with the tendency of large banks to offer such applications to consumers. Examples of Scorecard banks that offer online checking applications to consumers but not to small businesses include Citibank, Fifth Third Bank, Suntrust, U.S. Bank and Washington Mutual.

But based on our analysis of the small business prospecting process and the attitudes and behaviors of Internet-using owners of Micro businesses, this finding shouldn't be too surprising. Generally speaking, the role of the Internet in the sales process varies by market. It follows that the functionality banks build and the approach they take to promote the online offering will vary according to the role of the Internet in the sales process.

For larger businesses, the Internet works best when it qualifies prospects and introduces promising leads to the right relationship manager. For Micros, the Internet contributes best by taking a lead role throughout the sales process.

Having examined the prevalence of online account applications and the motivations and constraints that lead banks to prioritize differently for small businesses compared to consumers, we present three recommendations for banks seeking to better align their Internet delivery with their small business banking goals.

1) Take a nuanced view of the small business market when considering online applications.

Micro customers are often sole proprietors and, accordingly, do not require extensive documentation, such as corporate resolutions. Further, many banks take a mass-market strategy to some or all of the Micro segment.

With these two considerations in mind, it is not surprising to find that Union Bank of California allows sole proprietors to apply online even though the application process for other small businesses is much more paper-driven. The small business market is varied enough that universal solutions to the Internet's role in the sales process leave opportunity gaps.

2) Do business with your online personal customers.

According to Gomez research, 65 percent of Internet-using Micro owners have a primary personal banking relationship with their primary business bank. The extensive overlap is not an accident, as both banks and their customers have strong motivations for consolidating personal and Micro business relationships: Banks gain business and greater loyalty while their customers appreciate the added convenience.

The Internet offering should reflect the cross-sales goal. If a bank does offer Micro customers online applications, these applications should not only allow for, but promote funding from a personal account. Banks that have rolled out online applications are building this functionality: 80 percent of Scorecard banks that offer online small business checking applications allow customers to use the online process to fund their new account with a transfer from an existing personal account with the bank.

Even these banks could do more to promote such functionality, which appears as a minor detail in site messaging, but is really a key ingredient to help customers achieve a central business objective.

3) Help all customers decide.

Banks tell Gomez they have found prospective business customers use their Web sites when creating the shortlist they will consider for their banking business. To win these customers, banks need to do more than describe their products and services in high-level terms, with the expectation that the customer would then be ready to contact the bank.

Many large mortgage originators promote tools by which prospective borrowers can identify their needs and receive a tailored solution, or tools that allow the prospect to compare side-by-side the attributes of each mortgage program of interest. Lenders heavily promote this interactive content even though they know that in the likely event an interested prospect calls up, a loan specialist may recommend another product.

What are mortgage lenders thinking? Well, the customer arrived at the site already figuring the firm originates mortgages. Therefore, the prospect wants to see if the lender can meet their particular needs at an attractive price before considering the lender further.

Drawing on this lesson, banks should provide strong online decision support for larger small businesses -- even if a relationship manager will enter the picture before long. Prospects arrive knowing a bank offers checking accounts, and may likely assume the bank can provide merchant processing and other business banking services.

Banks should respond by moving beyond generic product descriptions and provide a combination of interactive account selection tools and matrices to encourage prospects to take the next step, even if that next step is ideally a phone call to the bank or a request for a call from the bank.

The role of the Internet in product sales varies across markets, and the approach to Internet delivery therefore should vary as well. But many banks are still missing opportunities to sell business customers on their products and services, and are even missing out on the potential to use the Internet to close some of their new business opportunities.

With a nuanced view of the spectrum of small businesses, and by addressing a prospect's intentions for visiting the site and the prospect's pre-existing relationships, banks can better use the Internet to capture more small business relationships.

Chris Musto is Vice President of Research specializing in Web banking and payment services at Gomez, Inc., a Waltham, Mass., Internet benchmarking and improvement strategies firm,

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