Getting to Know Your Small Business Customers

In an evolving financial services marketplace fueled by digital innovation, it’s more critical than ever to understand your customers' wants and needs in order to nurture and grow that relationship. Today at CBA Live, Geoff Knapp, vice president for Market Management, Digital Channels, Fiserv, presents Fiserv research on a specific and somewhat misunderstood customer segment – the small business customer. The Point talked to Geoff about how this research provides actionable insights regarding the small business customer.

Why did this study focus on the small business customer segment?

Financial services are evolving as technology drives the demand for convenient, real-time, anytime payment options across all segments. Small businesses are a very important, yet challenging segment for financial institutions. Small businesses exist in an ill-defined space, somewhere between consumer and corporate banking. Because of this, small businesses have sometimes found it difficult to get the solutions they really need from their financial institutions.

That’s why it’s so important to understand how small businesses are embracing and leveraging digital in the course of their daily activities. If we more fully understand how digital is driving small businesses – what types of payments they’re making and what devices they’re using – financial institutions will be in a better position to meet that demand.

Who are the disruptors? What role are they playing in the payments transformation for the small business?

Because the small business segment is so valuable, many nonbank competitors, or disruptors, are invading the payments space. They're filling a void by offering services the small business may not be getting from their financial institution. Companies like Square®, PayPal® and Amazon® are attracting business customers with services this segment often views as easier to use, less expensive and quicker to market than comparable financial institution services. That is precisely why this research into understanding the hearts and minds of the small business customer is so vital to changing these perceptions.

Can you give us some specific insights you've learned that financial institutions might find invaluable?

We’ve discovered a very interesting dynamic: Financial institutions tend to view small businesses in their early stages as risky, and as such, not worthy of their full attention. It’s a mindset of "Who knows if they are going to survive?" However, it's at this early stage when the small business owners decide which institution they are going to partner with as they build their businesses. This is a decision with long-lasting implications, as it's much harder to change institutions once the business becomes more established.

It’s important to have a longer-term perspective. Early-stage small businesses will be more and more valuable as the banking relationship matures – but only if the financial institution invests time and energy into the small business customer from the beginning, recognizing what the small business needs to succeed. It goes beyond features and functionality. If financial institutions get to know and deeply understand their small business customers, they will know what businesses need to grow. Financial institutions must change their perception, thinking of early-stage small businesses not as risky but as ripe with potential.

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