- Choosing the right banking partner is crucial for small business owners, who rely on the financial institution for receiving payments, paying bills, remitting salaries, and many more core business services.
- Most business owners want to access as many services online as possible.
- As you evaluate your options, review all of the available services to ensure the bank you choose supports all your needs.
- This article is for small business owners deliberating over which bank they should choose that will help them conduct the necessary financial transactions for their business but which will also be a good, long-term financial partner.
For small business owners, choosing the right banking partner is paramount to making sure orders get filled, employees get paid and operating costs are properly managed.
A survey of 600 business owners with annual sales revenue figures of $20 million or less conducted by nonprofit financial consulting firm BAI investigated how businesses bank. Its research highlighted some of the challenges of business banking, as well as the types of financial services that entrepreneurs want and need.
"Businesses need their financial services provider to make their banking experience easy so they can focus on running their business," said Karl Dahlgren, managing director of research for BAI.
Business owners want customized banking services
When asked what they wanted in a financial services provider, business owners participating in the BAI survey consistently said they sought out ease of use and business-friendly policies when choosing a bank.
According to the survey, the top three reasons a business owner would choose a new financial services provider are "lowest fees, best rates and understanding their business needs."
Respondents also listed four improvements they wanted to see in the current business financial services space:
- An improved omnichannel experience
- An enhanced in-person environment at physical branches, with experts on hand to help business owners achieve their financial goals
- Better tools to create more customizable financial solutions
- More helpful real-time content to help business owners handle everyday banking
"One of the most important priorities we uncovered is that business owners expect a smooth omnichannel experience, which they are not receiving today," Dahlgren said. "By listening to and understanding the voice of the customer, financial services leaders can seize an opportunity to stand out amongst the competition and provide unparalleled service offerings."
Key takeaway: Business owners look for low fees and good rates when selecting a bank. They also want banks to provide more customizable options and advice to make everyday banking easier and to help them achieve their financial goals.
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Businesses want more online banking services
BAI researchers also examined how business owners interact with their current partners. They found that 79% of business owners use the same provider for their business banking needs as they use for their personal finances.
While that figure may suggest brand loyalty, researchers also found that business owners have a lower net promoter score (24) than the average consumer (35). A net promoter score is used to track customer satisfaction and loyalty to a provider; the scale ranges from -100 to 100.
A majority of survey respondents said they visited a physical branch to open new accounts, apply for loans, request merchant services and set up other financial services, but most reported wishing that they didn't have to. Approximately 70% of business owners said they would rather open a deposit account online, while nearly 50% said they would prefer to take out a bank loan using the web.
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Seven tips for choosing a business bank
As you conduct your search, these seven considerations can help you narrow the scope so you find a bank that not only helps you with your banking needs but can serve as a long-term financial partner for your business.
- Know your needs. Before you start researching your business bank options, think about what you need most from a business bank. What are your overall business goals, and how can the bank support those? Can the bank support your business as it grows? Make a list of your business goals, as well as the banking products you'll need to meet those goals. Among the services you may need to grow are:
- Business checking accounts
- Business savings accounts
- Accounts with attractive interest rates
- Lines of credit
- Debit cards
- Online bill-pay options
- Employee checking accounts or credit/debit cards
- ACH payments
- Wire transfers
- Certified checks
- Small business loans
- Location matters. While many banking services are conducted online or via a mobile app, you may need to speak to a teller or bank representative to conduct certain services, like sending bank-issued certified checks. In those situations, you want a bank that is convenient to get to.
- Consider the size of the bank. Smaller, local banks offer personalized attention you may not get at a large corporation. However, bigger banks tend to have a wider range of services and improved access. Which is more important to you in a financial institution?
- Weigh your digital options. Services like mobile deposit and digital bill pay may top your list of needs. If that's the case, thoroughly evaluate the online and app-based tools before signing up. Read reviews of the products and ask the bank representative any questions you may have.
- Remember that your business and personal banks can be different. It's natural to turn to your personal bank first, but evaluate each banking service on its own merits – not on your experience with a related service.
- Keep an eye on the fees. Financial institutions commonly charge fees for many services and milestones, including low balances, wire transfers, overdraft fees, service fees and inactivity charges. Those fees quickly add up. If you thinking maintaining the minimum balance will be difficult, or if a service you'll frequently use is prohibitively expensive, consider a different bank. [Related Article: How to Negotiate a Business Loan Agreement]
- Ask about customer service. What happens if a service is down, your debit card is lost, or you run out of checks? Find out the type of customer service the prospective bank offers and how you access customer service.
Key takeaway: Before selecting a new business bank, investigate multiple points that will help you conduct daily business and support your business as it grows. Additional considerations include what services are offered, where the bank is located and the fees they charge.
Additional reporting by Stella Morrison.