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What’s Driving the Need for Small Business Digital Account Opening?

What’s Driving the Need for Small Business Digital Account Opening?

By Q2


Small business owners are busy. They manage employees, obsess over cash flow and inventory, handle marketing, fulfill orders, provide customer service, and take care of countless random items that pop up.

In the middle of their packed workdays, they can’t spare the time to sit down for an hour-long chat with a bank relationship manager. They don’t want to push anything off their already-full plates to spend time on the phone or at a branch to open accounts or expand their existing relationship. But, even as digital account opening (AO) capabilities for consumer accounts have evolved in recent years—even becoming something of an expectation—AO for small business has lagged behind. This is puzzling, as this customer base has a lot of potential value—arguably a fair amount more than consumer accounts.

The conventional wisdom of financial institutions (FIs) is that they need to protect face-to-face relationships with small businesses. After all, currently only about 30 percent of businesses begin account applications in the digital channel, while roughly 60 percent open accounts in a branch. At the same time, almost 80 percent of businesses visit branches regularly and 40 percent report having a relationship manager. So, there does seem to be a relationship to protect.

But, well over 80 percent of small business owners or operators have adopted online banking and over 40 percent are engaged in mobile banking—and these numbers continue to rise. It’s also important to note that even face-to-face relationships are supplemented and complemented by digital features and/or online research of FIs and solutions.

Even face-to-face relationships are supplemented and complemented by digital features and/or online research of FIs and solutions.

All of this said, there’s a disconnect between what small business owners and operators are doing digitally versus in-branch—and what they’d prefer to do. Fully 80 percent of them want to do their research into banking via online and mobile, and half would prefer to open accounts completely through digital channels—while only 46 percent prefer seeking out a branch to open their account.

There’s a case to be made that these percentages will skew further towards a preference for business AO if:

  1. business digital account opening becomes easier, with improved user experiences,
  2. owner and operators become more comfortable with the idea of opening accounts online, and
  3. FIs put a greater focus on making the particulars of business accounts—like minimum balances, allowable transactions, and available services—more accessible and clearer through digital channels.

Digital isn’t going away. And, while no one should fully write off brick-and-mortar branches or face-to-face relationships, reducing friction and supporting the digital banking needs of very busy business owners can only help onboard more businesses and sell more services while helping FIs grow their market share of valuable business banking accounts.

To learn more about small business account opening and providing businesses with better experiences, check out Q2 and Javelin Strategy & Research’s webinar Solving for Small Business Digital Account Opening.

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