Many financial institutions view small-business mobile banking as a necessary evil. They know they need to offer it, but they struggle to build the business case for investing in a product that is often given to customers for free. Banks are at a crossroads: They can offer small businesses their consumer offerings, rebranded as business ones, or they can invest in true business mobile banking offerings that will likely meet most customer needs better. A strong case exists for the latter.
Building a business case for rolling out or investing in small-business mobile banking requires looking beyond the direct revenue to consider market competitiveness and the profile of mobile banking users, an extremely attractive customer segment. They may not pay fees for mobile access itself, but they tend to use multiple bank products for which they do pay. This is a revenue stream that financial institutions can't afford to lose.
This article examines the profile of small-business mobile users. It is based primarily on the results of a September 2013 Aite Group online survey of 1,003 US businesses generating less than $20 million in annual revenue each (subscription required). This revenue category does go beyond the small-business definition used by many institutions, but it represents a segment largely underserved by financial institutions and thus untapped revenue potential.
Small-business interest in mobile and why banks must offer it
Small businesses are interested in banking via the mobile channel. Approximately 32% of businesses participating in the survey already bank via a mobile device, and another 31% are likely to do so. Though they use their mobile devices to check balances, the greatest value proposition to small-business owners is the ability to approve payments and conduct banking transactions while out of the office.
The online channel is currently their preferred channel for interacting with financial institution partners, but a financial institution's mobile capabilities are an "important" or "very important" consideration when selecting a new banking relationship for 51% of survey participants. Banks therefore have no choice but to invest in these capabilities or jeopardize their future success with this customer segment. Mobile capabilities are especially important to businesses generating more than $1 million in annual revenue. (See: Corporate Mobile Banking Slowly Gaining Traction.)
Christine Barry serves as research director for Aite Group's Wholesale Banking practice, focusing on the strategies and technology implementations of global banks of all sizes. Her recent research has addressed global cash management trends and technologies, capturing the ... View Full Bio