Digital banking offers huge potential to improve interactions and deepen relationships with small businesses. Yet financial institutions too often provide digital services for free to customers willing to pay for services.

That is a conclusion reached consulting firm Simon-Kucher & Partners in its a study “Monetizing Digital Banking Products for Small Business Customers.”

In one example, the study showed small businesses willing to pay on average $5.80 per month for receiving transaction verification and advanced warnings by mobile phones.

The paper also found small businesses don't have a positive perception of mobile banking services:

34% have never used mobile banking, even though their financial institution offers it.
69% do not have a positive perception of mobile banking services offered by their institutions.

In order to take advantage of this largely untapped market potential, the study suggested financial institutions need to develop systematic approaches to designing, pricing and selling their offerings.

“We commonly observe that these steps are managed separately and without consideration for one another, which results not only in suboptimal products, but also in prices that either do not meet the customer's needs or do not reflect the customer's willingness to pay.”

Over the past year, the paper observed a decline in online banking users. “While in 2015 only 9% of survey respondents did not use online banking frequently or at all, the number has now grown to 20%.”

This trend may indicate that financial institutions either do not offer the products that meet the needs of their small business customers or that they do not have the right approach to communicating and selling their offerings. On the flip side, an overwhelming majority of respondents (80%) do use online banking services and 59% use online banking at least on a weekly basis.

Although less pronounced, the study observed a similar trend for mobile banking. In 2015, 28% of the survey respondents indicated that even though their financial institution offers mobile banking, they have never used it. This number has increased to 34% in 2016.

“Interestingly, while the overall take up of mobile banking has decreased from 60% in 2015 to 53% in 2016, the percentage of higher frequency users has increased. This trend might indicate that mobile products are helpful when a customer decides to use them, but potentially inadequately marketed and sold,” the paper announced.

This paper is third in a series of survey-based studies Simon-Kucher & Partners conducts annually as a part of its continuing thought leadership in pricing and marketing strategy in digital banking. The survey, conducted during the third quarter of 2016, used a panel of 215 U.S.-based small business managers spanning 20 major industries.

Instant Insights /

Are CU Members Willing to Pay for Digital Banking Services?

Related Stories

Recommended For You