Entrepreneurs aren’t feeling the love from their banks these days.
A recent J.D. Power study meant to gauge how satisfied small businesses are with their banks shared disappointing data this year. Of all the banking types the company tracks trends for, the small business banking experience was just one of two that consistently showed huge declines in approval since last year. The study, which took place from June to August, included the sentiment of 8,378 small business owners or their financial decision-making partners.
Banks ranked low in many categories, including service, fees and product offerings. What were entrepreneurs most upset about? Here’s a summary of the findings.
It’s Time to Get Personal
While banks use terms like “personal” and “relationship” when marketing to small businesses, the study revealed that customers aren’t feeling the love. Currently only 52% of small businesses reported having an account manager, and they only reported being more satisfied when they had a good relationship with their manager. Those who didn’t feel like it was a good match seemed more neglected than those without one at all.
If that’s not enough reason for banks to build relationships, those customers who developed trust with an account manager also became avid fans of their bank. They were more likely to say good things about their experiences to friends and family and acted as a legitimate source of referrals. (These same customers tend to stay with their branch longer, too.)
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Why Lending Matters
One of the most significant things that a bank can do to increase a sense of loyalty, however, is to increase borrowing opportunities. The study showed a marked difference between small business customers who had taken out a loan or line of credit and those who didn’t; current and past borrowers were significantly more satisfied with their banking experience overall.
Is Your Bank a Winner?
Even with the data showing that banks are losing favor with small businesses, there are some that seem to be more popular than others. Who you choose as “best bank” will likely depend on where you live, however. The study separated the fan favorites by region, with Chase taking the West, M&T ruling the Northeast, Citibank winning the Midwest, and TD Bank owning the South. Other notable names in satisfaction include Capital One, U.S. Bank, Bank of the West, and Fifth Third Bank.
Can Big Banks Keep Small Business Customers?
While business owners have many reasons to go with a bank that loves them back, the real loser could end up being the banks themselves. In a competitive market that has brought many small banks, Peer-to-Peer lending groups, and mobile-only funding options out to play, it’s going to take some effort to keep unhappy customers from being poached. With name recognition not being enough anymore, the traditional “big bank” environment may have to make even bigger efforts to keep their best customers close. The study, which showed a downward trend in overall banking satisfaction, emphasized that there may be a long road ahead to get small businesses feeling good about banking again.
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