Abstract
Overview
There are more than 26 million small businesses in the U.S., but
“under-banked businesses” tend to be overlooked and underserved by
most banks. Under-banked businesses (UBBs) have not yet established a business
banking account: they hide in the consumer banking platforms, possibly paying
lower account maintenance fees, but eventually needing specialized services,
such as payroll, remote capture, and credit products to grow. Under-banked
small businesses, like under-banked consumers, tend to be cash and asset-poor,
but successful firms will grow into highly profitable small
“banked” businesses (small businesses with a business bank
account). Due to the challenging economic environment, financial institutions
must innovate and refine their business strategy in order to help small
businesses survive and expand. By marketing to and servicing UBBs, banks and
credit unions can deliver value-added features and services that help these
firms compete and grow into a mutually beneficial relationship.
Primary Questions
- How are under-banked businesses (UBBs) and small banked businesses
fundamentally different than other online bankers?
- How do under-banked businesses and small banked businesses differ in their
banking behaviors from other online bankers?
- How should banks or credit unions refine their small business banking
offerings? What additional services or features do they need?
- What indicators should banks look for to identify underbanked businesses
“hiding” on consumer platforms to market a more mutually
beneficial banking relationship?
- How valuable are small banked businesses and underbanked businesses to
FIs? Increased deposits? Greater financial product ownership? How many
comprise this segment?
Methodology
This report is based on data collected online from a random-sample panel of
2,779 households in March 2009. The survey targeted respondents based on
representative proportions of gender, age and income compared to the overall
U.S. online population. The overall margin of sampling error is ±1.86%%
percentage points at the 95% confidence level.
This report is also based on data collected online from a random-sample panel
of 2,339 respondents in September 2008. The survey targeted respondents based
on representative proportions of gender, age and income compared to the
overall U.S. online population. Overall margin of sampling error is
±2.03% at the 95% confidence level.
Secondary data from public sources, such as the U.S. Census Bureau, the Bureau
of Labor Statistics and the Small Business Association, was also used.
Report Statistics
- Audience: Financial Institutions, Card Issuers, Technology Vendors
- Author: Alan M. Ruperto, Associate Analyst,
- Contributors: Mary Monahan, Research Director & Managing Partner;
Mark Schwanhausser, Research Analyst, Multichannel Financial Services;
Nicholas Shook, Research Associate; James Van Dyke, President and Founder
- Length: 39 pages, 19 charts/graphs
| 
View Cart
