Capturing small businesses as banking customers will be a top priority for many banks this year, according to a new report from Boston-based Aite Group. As there are more than 25 million businesses with less than $10 million in annual revenue operating in the United States, the small business community represents a relatively untapped customer segment with considerable revenue potential for banks, the report notes.
To capitalize on that market, banks will have to develop more-effective small business programs, Aite Group stresses. Currently, nearly 70 percent of small businesses are serviced by the retail side of the bank, but Aite Group forecasts that by 2008, the percentage of small businesses still serviced by retail banks will drop to 50 percent.
While retail accounts may be sufficient for micro businesses (under $1 million in annual revenue), the needs of relatively larger companies often are better understood by the corporate banking side, the report states. This is especially important for businesses that complete overseas transactions or are looking for end-to-end online small business banking support. Retail accounts often are insufficient for advanced financial procedures, whereas corporate accounts and services can be far too complicated.