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- On November 15, 2018
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J.D. Power, the consumer insights, advisory services, and data and analytics company, recently released the latest findings from their 2018 U.S. Small Business Banking Satisfaction study. The feeling of small business owners regarding their banks can be summarized in one word: underappreciated.
Other studies have pointed to economic success for small businesses in America. Additionally, small business owners are optimistic about their growth this year, and for the future as well. However, when it comes to their banks, only 37% of respondents feel as if their bank appreciates them, and a mere 32% report feeling that their bank actually recognizes the ins and outs of their business.
Perhaps it’s time companies looking for loans consider alternative lending companies. The market, according to a report by the Alternative Investment Management Association, is currently around $600m in size, but within the next few years, this is likely to nearly double in size, reaching $1trn by 2020. This understandably has traditional banks worried — and with good reason.
Bob Neuhaus, Vice President of Financial Services at J.D. Power, thinks that banks may feel that they don’t have the resources to dedicate to the hands-on approach to banking that many small businesses desire. As he states in the report, he believes that banks can do a better job of introducing digital tools that could help ease the pressure they feel to be constantly available — or, as he puts it, ‘high-touch’ — which could counter the negative sentiments from small businesses regarding the banks’ service.
Here are the top five highlights from the J.D. Power 2018 U.S. Small Business Banking Satisfaction Survey:
- Small Business Satisfaction is 800/1,000. While this number seems high, it is reported as “lackluster”, particularly when compared to retail banking satisfaction and credit card satisfaction — two other studies propelled by J.D. Power.
- Small Businesses Feel Unappreciated. As previously mentioned, only 37% of small business respondents say they feel appreciated by their banks, and 32% say their bank knows their business. Additionally, only 28% of small business owners declared that their bank specializes in small business banking. Small business owners also feel neglected when it comes to their banks anticipating changes that they may need to operate.
- Mobile Banking is Underutilized. Small business owners want the personal connection to their banks, which is likely why many rely on visiting the physical location to engage in banking. Small business owners are less likely than retail customers to use mobile banking options, with 61% of small business owners classified as “branch dependent.” Similarly, 47% of small business owners report that they do not utilize their bank’s mobile offerings, believing that mobile services provide little value to their business.
- Account Managers are Highly Trusted. In a positive note, small business owners report a much higher rate of satisfaction with their account manager, who they view as a trusted advisor. However, if the account manager is not trusted, then these small business owners rate their level of satisfaction as lower than those who don’t have an account manager at all.
- Satisfaction Goes Hand-in-Hand with Trust. J.D. Power also includes a Trust Index score, evaluating service expectations, responsibility and resolve for mistakes, putting customers first, and providing advice. The group found that the only banks that scored highest in satisfaction also scored well in the Trust Index, demonstrating that small business owners need to have a positive feeling in both areas.
About the Study
The J.D. Power U.S. Small Business Banking Satisfaction Study evaluated the responses from 7,993 small business owners during the summer of 2018.