Current bank offerings for SMBs aren't really working, according to a new report from 11:FS.
Only 38 percent of businesses polled believe their business banking offers additional benefits compared over their personal accounts. And only 18 percent of SMBs ‘completely agree’ that banks offer the services they need to effectively run the financial side of their business
JPMorgan Chase was the worst ranked among banks and fintechs in terms of meeting the financial needs of SMBs. Stripe topped the list by a large margin.
SMBs are looking for more from their banks than just a place to store and move money. 39 percent of SMBs in the US use PayPal to help manage their day-to-day finances.
"SMBs are the US economy, accounting for 98 percent of all businesses. They’re run by talented, passionate and determined people but when it comes to finances we discovered they are simply not getting what they need," said Ryan Garner, JTBD lead at 11:FS.
“The products banks offer -- accounts, loans and credit cards -- have not moved on and don’t help owners in crucial areas such as cash flow management, and making more informed decisions based on their data."
The survey says that, in particular, small and medium businesses are looking for ways to:
- Track and manage cash flow in a coherent way
- Make smart and proactive business decisions based on their financial data
- Build business credibility and legitimacy for funding
The survey was compiled based on 1023 quantitative interviews with US small businesses with up to 20 employees, and 12 in-depth qualitative interviews with business owners across nine states.
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In the eyes of SMB customers, banks aren't only competing with other chartered institutions. Only half (51 percent) of SMBs use one of the top five banks, while over two thirds also use one of the top six business platforms, like Stripe, PayPal, QuickBooks and Shopify.
These firms are generally seen as more responsive to the jobs that need to get done at SMBs. They are also digital, so their responses to the recent pandemic have generally been swift.
“There is a huge opportunity for banks and fintech firms to rethink SMB financial services for the digital world," Sam Maule, managing partner - North America, at 11:FS, added.
"A big part of the solution is shifting away from cookie cutter, commodity products towards digital services that meet the unique and diverse requirements of SMBs. With the significant service gaps we’ve identified in the research, doing so could see those propositions win significant market share.”