Are Banks Meeting SOHO/Micro Customers' Online Needs?

Gomez's Q4 SOHO/Micro Banker Scorecard* and related customer research reveal that re-purposed consumer Web banking offerings can serve SOHO and micro businesses quite well. But it also shows that banks are just starting to roll out online features and services these customers--small business with under $1 million in revenues--demand most.

Bank of America's Online Banking with Bill Pay offering took top Scorecard honors, followed closely by Key, Fleet and Bank One (see ranking below). Bank of America took top honors in part because it has rolled out check imaging to almost all states and presents a clean small-business view of its products and services in its public site area while maintaining a consistent look and feel within a secure account management area that seamlessly covers all products, including credit cards.

To better understand our Scorecard findings we examined the four most demanded SOHO/Micro business banking features revealed in our recent customer research report "Improving and Growing Small Business Web Banking." These features, ranked in order of the number of Scorecard banks offering each, include:

1) Combined views of personal and business accounts.

SOHO and Micro customers want to view their personal and business accounts together and banks appear to be listening. Over two-thirds SOHO/Micro Scorecard banks offer this feature. Many banks use the same front end for SOHO and Micro customers as they do for consumers and also the same back-end platforms, so it is not usually difficult to support a single view of personal and business accounts where there is common ownership. Further, in most instances where banks offer a common view of personal and business accounts, they also offer the ability to move funds between these accounts.

2) Credit cards.

Gomez finds that SOHO/Micro customers who use Web banking are particularly likely to hold a credit card with their primary deposit institution. These customers are better served if they can manage their credit cards while managing the rest of their relationship with the bank. But roughly half of Scorecard banks allow customers to pay off their credit cards with a transfer instead of a bill payment. More allow transfers to a loan, even though SOHO/Micro customers are more likely to have a credit card with their bank than a loan. Among banks that do offer integrated credit card functionality, Bank of America does so seamlessly, and even allows for online cash advances against the credit card.

3) Online imaging of checks and statements.

Document imaging, in particular of checks or statements, is a top priority for SOHO and Micro customers, as it is for larger small businesses and also consumers. But only four of 15 Scorecard banks offer online check imaging. Of these four, Bank of America, Bank One and UBOC only started offering online check imaging this year. Wachovia has offered check imaging for longer. Only Key and UBOC offer an online version of the monthly statement.

Those banks launching online statements should keep in mind both HTML and PDF as statement formats. HTML formats allow customers to answer their own questions about their statements more easily, while PDF formats allow customers to see exactly the document that would come in the mail and also better set up paper suppression. Several banks have or are planning to offer customers the ability to view statements in either format.

4) E-mail alerts.

SOHO and Micro customers, along with larger small business customers and consumers, are very interested in account-based discretionary e-mail alerts. But such services are in short supply from Scorecard banks. While a couple offer e-mail alerts around bill presentment and bill payment, only Bank One offers account-based e-mail alerts, and Bank One only started doing so recently.

This slow rate of up-take means SOHO/Micro banking is lagging consumer banking and credit card services when it comes to account-based discretionary e-mail alerts. For instance, Citibank offers this service to cardholders and consumer deposit holders but not to small business customers. Maintaining Perspective

While the online services larger businesses demand and use can extend a consumer-based offering past its breaking point (and therefore mandate a completely different design), Gomez finds banks are able to serve the SOHO/Micro market well with re-purposed offerings. All of the in-demand features discussed above can fit comfortably within a re-purposed retail offering.

Meanwhile, many features that might strain a SOHO/Micro-oriented service based on a bank's retail offering aren't in strong demand among SOHO/Micro customers to make building an entirely new offering a worthwhile near-term priority. For example, smaller small business customers show little interest in multi-user access and have somewhat less (though still present) interest in alternatives to bill payment (such as wires) than do larger small business customers.

The SOHO/Micro Banker Scorecard

Top Ranked Sites (Score)

1. Bank of America (6.59) 2. Key (6.21) 3. Fleet (6.19) 4. Bank One (6.08) 5. Chase (5.89) 6. Wells Fargo (5.41) 7. Citibank (5.37) 8. UBOC (5.33) 9. LaSalle (4.89) 10. US Bank (4.79) 11. Wachovia (4.72) 12. National City (4.42) 13. PNC (4.02) 14. Comerica (4:00) 15. Sun Trust (3.51)

Chris Musto is Vice President of Research at Gomez, Inc., an Internet Quality Measurement firm in Waltham, MA. For more insights on Growing and Improving Small Business Web Banking contact Chris at [email protected].

*The SOHO/Micro Banker Scorecard is comprised of the fifteen largest banks by commercial and industrial loans as of Q2 2001 that offer Web small business banking. At banks maintaining two Web small business banking sites, we examined offerings targeted at SOHO and Micro customers. As a result, some banks offer online services targeted at larger small businesses or at middle-market customers that contain functionality not credited here.