According to 2022 JD Power US Small Business Satisfaction Study.
While around 76% of small business owners said they would like to receive financial advice from their financial institution, only 15% said they receive comprehensive advice from their bank, according to the study.
“They look to their banks for advice on things like available credit, advice on reducing fees and technology that can benefit their businesses,” said Paul McAdam, senior director of banking intelligence and payments at JD Power. “This scenario presents a huge opportunity for banks to provide comprehensive advice that reflects a full understanding of the company’s business objectives and shows a real and committed partnership.”
According to McAdam, small business owners are looking for practical advice beyond product-focused advice and want a point of contact at the bank with whom they can communicate. They agree with the digital model, but being able to communicate with the bank is key.
“Anyone competing in this space has to be good with people. Small businesses use the phone, they use digital, but they like to receive good service from staff, so that’s really going to be the challenge any new entrant will face when trying to break into small business relationships” , McAdam said.
McAdam said fintechs like Square have an opportunity to enter the space and provide efficient services that banks lack.
Plus, he said, fintechs are good at giving small businesses the guidance they want digitally.
PayPal’s virtual relationship manager model over the phone for their small business customers is also an example of how fintechs are filling a need. But fintechs need to work on their phone service experience because banks are better at it, he said.
Although fintechs do not have a branch, their cutting-edge technology can offer a practical solution for small business owners to help them cope with the difficult economic conditions in which many currently find themselves. The study indicates that about 25% of small businesses are in the liquidity or limited capital category, while another 25% are in the financially vulnerable section.
Currently, only 58% of small business owners receive transactional advice, while 27% receive constructive advice from banks, according to the study. But clients who receive comprehensive advice are more satisfied than those who receive constructive or transactional advice.
McAdam thinks that in this conservative credit environment, small businesses would benefit if they received credit.
“If banks could help small businesses get credit during this difficult time, it would pay handsome dividends in terms of overall satisfaction and loyalty,” he said.