Small business owners want more advice from banks, study finds | Techy Kings

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Small business owners navigating rising inflation, supply chain issues, and tight labor markets are keen to receive advice from their bank partners, according to JD Power 2022 US Small Business Banking Satisfaction Survey.

While about 76% of small business owners said they would like to receive financial advice from their financial institution, only 15% said they received comprehensive guidance from their bank, the study found.

“They’re looking to their bank for guidance on things like available credit, tips to reduce fees and technology that can benefit their business,” said Paul McAdam, senior director of banking and payments intelligence at JD Power. “This scenario presents a great opportunity for the bank to deliver comprehensive advice that takes into account a full understanding of the company’s business goals and demonstrates a truly committed partnership.”

According to McAdam, small business owners are looking for practical advice beyond the product-oriented and want a point of contact at the bank who can communicate with them. They are good with the digital model, but being able to communicate with the bank is key.

“Anyone who competes in this space needs to be kind to the public. Small businesses are on the phone, they’re using digital, but they like to receive good service from staff, so that’s really going to be a challenge that any new entrant will face as they try to break into small business relationships,” McAdam said.

McAdam said fintechs like Square have an opportunity to step into the space and provide effective services that banks don’t.

In addition, he said, fintech is good at giving advice to small businesses that they want digitally.

PayPal’s phone-based virtual relationship manager model for their small business customers is also an example of how fintech is meeting the need. But fintechs need to work on their phone service experience because banks are better at that, he said.

Although fintechs do not have branches, their cutting-edge technology can offer practical solutions to small business owners to help them navigate the difficult economic conditions that many people are currently facing. The study says that around 25% of small businesses are in the cash or capital constrained category while another 25% are in the financially vulnerable section.

Currently, only 58% of small business owners receive transactional advice while 27% receive constructive advice from banks, according to the study. But clients who received comprehensive advice were more satisfied than those who received constructive or transactional advice.

McAdam argues that during this conservative credit environment, small businesses will benefit if they receive credit.

“If banks can help small businesses with credit in these challenging times, it will pay handsome dividends in terms of overall satisfaction and loyalty,” he said.

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