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PCBB Banc Investment Daily May 26, 2017
Banc Investment Daily
May 26, 2017

Great Business Service Needed

Dealing with customers is always tricky. The more information people have the more they seem to demand from bankers. Look no further than research from Thunderhead that finds 30% of people will share a bad experience they have with a company and 19% will not trust a company after a single bad experience. That is a lot of pressure. In the banking industry it seems everything is going digital, so the pressure to deliver a high quality experience and great customer service no matter the channel is critical.
When it comes to consumers and mobile banking, studies show that mobile banking has taken hold. So much so in fact, that it's a feature many customers depend on. Today, some 77% of US adults now own smartphones, according to Pew Research. That is driving interest by small business owners to at least take a look at mobile banking.
A new study of 215 small businesses in more than 20 major industries by RateWatch and Simon-Kucher & Partners provides some interesting fodder around this, however, for discussion. It shows that some negative perceptions persist among small business customers. Despite the availability of mobile banking at their bank, 34% of small businesses polled have never used it. What's more, 69% do not have a positive perception of mobile banking services offered by their institutions.
Nevertheless, it appears that it's not so much that small business owners don't want to use mobile banking. The problem is that mobile banking hasn't come up to speed to meet their unique needs. While it's relatively quick and easy for a consumer to deposit one or two checks remotely, it's much more cumbersome for a small businesses owner to do so. Further, it is not an easy task for small businesses to reconcile invoices and bank statements with the mobile technology available today.
All signs point to the fact that the demand is there. Small businesses want to save time by doing their banking on the go. That means bankers should expect more users here once the technology matches up with the mobile banking needs of small business owners.
To illustrate, consider the increasing number of small business loan applications that are being made via mobile phone. A 12 month analysis of transactions on Biz2Credit between Oct 2015 and Sept 2016 showed that almost 56% of small business loan applications came via mobile devices in Sept 2016 vs. less than 40% 1Y earlier.
Small businesses clearly want mobile functions that are easy to use and tailored to their needs. They need a souped-up business version of what's already available to consumers. Community banks with mobile savvy small business customers should keep this in mind. Indeed, the RateWatch and Simon-Kucher study found that digital customer satisfaction is directly correlated with the rate at which digital innovations or new digital features are introduced.
As we have previously reported, there are several big banks offering mobile apps specifically for businesses already. Since the demand is there, shrewd community banks may want to begin stepping up digital offerings as needed to satisfy this growing market. To begin, ask your business customers regularly what they expect from mobile banking, address any new features needed with your core provider and make sure your digital budget incorporates this growing area of your business.