Can you guess what percent of companies in the U.S. are considered small businesses?
Small business is actually really, really big business in the United States. A whopping 99.9% of all companies in the U.S. have fewer than 500 employees and are classified as small by the U.S. Small Business Administration. Small and medium businesses (SMBs) are the most active and profitable segments in retail banking.
In the current environment, servicing the SMB market means grappling with inherent paradoxes.
Financial institutions (FIs) are at a crossroads: in a recent poll we conducted with banks and retailers, 85% of FIs say the merchant segment is a growing focus, but only 28% say their service offerings to merchant clients are sufficient.
SMB transactions are labor-intensive, cash heavy and often occur during a branch’s busiest times. Then there’s the management and reconciliation of after-hour deposits, which can be costly and time-consuming. But the biggest challenge in serving this critical segment may be the paradoxical ways they view their relationship with their bank:
- Getting in and out of the branch quickly is paramount as time is money for sole proprietors and SMBs with just a few employees … yet they value the connection and personal touch of engaging directly with someone at the bank who knows them.
- Three out of four merchants we polled say they would like to use automated or self-service technology to conduct business withdrawals and deposits … yet more than half say that if forced to use self-service instead of a teller, they would consider switching banks.
The evolution of banking is happening, but FIs must address the problem of inertia.
Until recently, self-service solutions often couldn’t provide the level of support SMBs need. Deposit bundle acceptance and withdrawal limits were designed for the average consumer, not a business professional with large daily cash-in and cash-out requirements.
Yet retailers and FIs both express a desire to use automation where it makes sense.
Modern self-service has evolved to accommodate SMBs’ distinctive needs. Our new line of self-service systems, DN Series™, enables larger, envelope-free cash and check deposits, more flexibility in denomination choice and immediate funds availability. Paired with new mobility and cardless access solutions, retailers even have the option to administer a one-time QR code that staffers can use to conduct transactions, ensuring greater security when business owners can’t get to the bank themselves. And they can do it all when they want, without the limits of bankers’ hours.
Define the journey, then educate SMBs to choose the new path.
One of the first steps we take in the branch is working with FIs to develop a playbook that includes lobby management and self-service education for staff and consumers. Lobby leadership and consumer education are crucial to the success of new self-service implementations.
The cash cove on DN Series, for example, is the enabler for much larger bundles, but consumers don’t necessarily intuit the reason for the change. The right concierge or lobby manager can recognize an SMB as they enter the branch, direct them to a self-service terminal and describe the benefits of new features like the cash cove and cardless access, and point out features like e-receipts that make tracking cash much easier and streamlined, and electronic pre-staged transactions that are more secure, traceable and allow for instant account credit of cash deposits.
In a world where nearly a quarter of SMBs we polled say they engage with a branch teller daily, it’s only common sense to offer these key customers more options that fit their needs. Plus, educating and empowering SMBs to bank the way they choose can help deepen their relationship with your brand, while enabling you to repurpose staff to conduct higher-value transactions and customer conversations.
Want to discuss how your organization can drive growth in this key market? Let’s start a conversation.
This article originally appeared in RBR Banking Automation Bulletin.