Small businesses still want and need banking relationships, despite the acceleration in digital change across financial services, according to research from CI&T.
The digital technology firm examined how US banks can better serve small businesses post-pandemic, surveying and interviewing 500 small and medium-sized businesses with an annual revenue up to $25 million.
The report found that, while small business owners understand the convenience and cost-saving benefits of digital banking, they still want personal interaction and relationships due to the complexity of their work.
“Small businesses are considered the lifeblood of the American economy, and banking relationships are the lifeblood of small businesses,” said Robin Borelli, business director of financial services at CI&T.
According to a 2020 report from the US Small Business Administration, small businesses account for 44% of economic activity across the country and employ more than 60 million people nearly half of the private sector workforce.
“The post-pandemic rebirth of small businesses in the US will create enormous opportunities for the banking industry,” Borelli added. “The primary research that formed the foundation of this study revealed significant insights into the possibilities – and risks – for small business-banking relationships of the future.”
The pandemic prompted many banks to embrace digital banking services and substantially increase their digital offerings as a way of overcoming restrictions on movement and social distancing requirements.
Up to 84% of small businesses reported trusting in their bank, but focus groups and interviews revealed that expectations were rising – along with frustration and confusion over complex and opaque fee structures.
The CI&T research echoes similar findings from KeyBank’s 2020 Financial Resiliency Survey, which reported that those aged under 35 said they preferred a combination of digital and in-person banking more often than older Americans.
A leading analyst at Wells Fargo recently forecast that the move to digital banking could result in up to 200,000 jobs lost across the US banking sector.