Frustration among small business owners toward their banksappears to be growing, and a number of them said they are makingplans to jump ship over the next two years.

The findings come from a new Aite Group LLC report of 283 ownersand executives of businesses that generate less than $10 million inannual revenue. Among small businesses that are “disappointed” withtheir financial institutions, 31% stated they “definitely” or“probably will” switch to a new financial institution over the nexttwo years. Thirty-eight percent of the disappointed bank with thebig four banks, while 41% bank primarily with regionals. The bigfour are Bank of America, Citigroup, JPMorgan Chase and WellsFargo/Wachovia.

The most significant declines in satisfaction were seen incustomer ratings of service, online banking application ease-of-useand financial institutions' ability to understand their specificsmall business needs, Aite found. Most respondents said their banksweren't doing a good job providing tools for managing cash andtracking payables and receivables. The voids could present yetanother opportunity for credit unions to take up the slack.Ineffective cross selling and missed opportunities have resulted inmost banks maintaining an average of only three products per smallbusiness customer year over year, according to Christine Barry,research director at Aite and co-author of the report, “DecliningSatisfaction Levels Among Small Business Customers.”

“While the current economic environment is creating newchallenges, financial institutions cannot lose sight of theimportance of providing high levels of customer service,” Barrysaid.

The financial crisis and current recession have led manyfinancial institutions, especially the larger ones, to tightentheir credit policies, making it difficult for some smallbusinesses to access funding, Barry noted. Fewer small businessloan approvals by banks have resulted in the SBA backing 36% fewer7(a) loans during its 2009 fiscal year than it did during the prioryear.

One surprise from the survey was the growing dissatisfactionwith banks' online applications. Even though some banks haveshifted away from homegrown solutions to vendors to provide suchservices, the payoff has not come to some small business owners.One reason could be the lack of segmentation strategies. Somelarger banks offer sophisticated online banking to their smallbusiness customers without bundling them to best fit theirneeds.

Despite financial institutions' increased focus on the smallbusiness customer segment over the last few years, smallbusinesses' overall level of satisfaction with their primaryinstitutions decreased between 2007 and 2009, according to Aite.This is especially true among those that had described themselvesas “extremely satisfied” in 2007.

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