One third of small and midsized companies are considering switching their bank in the wake of the COVID-19 pandemic, according to research by data and analytics group Greenwich.
Banks’ ability and willingness to process Paycheck Protection Program (PPP) loans was the primary reason for wanting to switch, the firm’s survey found.
Jacqueline Vose, managing director of customer experience at Greenwich, said regional and local banks were “clear winners” from the crisis as they “addressed current client needs and proactively contacted each client to address concerns”.
As companies begin to recover from the pandemic and associated economic shutdown, Vose said they will seek out banking providers “better suited to meet their needs”, including a greater willingness to lend to smaller clients.
Greenwich’s Crisis Response Index survey found that reliable access to credit was a top consideration when changing providers, with 28% citing it – up from 19% in 2018.
However, Vose emphasized that relationship management had also emerged as a vital element of client service.
Vose said: “Client sentiment is that larger, national banks attempted to centralize the process during the crisis and remove the relationship manager as the primary point of contact. This has reduced the benefit of the long-standing partnership and changed the key differentiator to servicing commercial clients.”
One business owner quoted in Greenwich’s study explained that their relationship with their previous bank broke down as it did not help with the PPP process.
“It was one of the banks that catered to the bigger clients only and left the small businesses blowing in the wind,” the unnamed client said.
“I went to a small local bank where I had no relationship established and they started helping me with the process. I am getting the loan thanks to them.”
Based on a survey of 148 business owners, Greenwich found that valuing a long-term relationship was an important factor for the vast majority of clients: 91% ranked it four or five out of five for importance. The availability of digital channels was highlighted by 84% of respondents, and a “willingness to lend” by 83%.
Almost two thirds – 63% of respondents to Greenwich’s survey said they were using their bank’s digital channels more as the primary communication method. Similar proportions said they were communicating with relationship managers via email and telephone. Just 4% said they were using video conferencing.
Multiple studies in the past few months have indicated that US banks must invest more into their digital offerings. International surveys conducted EY and Boston Consulting Group found that a quarter of individuals were more likely to use online services.
“The COVID era has shown once again that banks must put clients first,” Vose said. “Business clients are ready to leave their primary bank, with whom they’ve invested lengthy partnerships, to reinvent their relationships with banks that understand the need to blend servicing between traditional banker relationships and new digital tools.”