The State of Business Banking Today: 2023 Survey Highlights

The collapse of Silicon Valley Bank (SVB) marked the second-largest bank failure in U.S. history. This implosion happened for multiple reasons, including higher interest rates, a liquidity crisis, and a bank run. While bank failures aren’t uncommon, it’s rare to see banks of SVB’s size become insolvent. When these events happen, questions arise about how businesses should adjust their operations.

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As a response to the SVB financial crisis and other bank failures this year, Centime recently surveyed 500 finance professionals about their banking priorities and concerns. Keep reading to see what they had to say.

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The State of Banking: New Data Emphasizes Dire Need for Diversification

While the FDIC protected SVB clients beyond the typical $250,000 insurance cap, this event was a grave reminder of the vulnerabilities that come with stockpiling the majority of your business funds into a single bank account. In the following section, we'll explore how finance professionals feel about their own banking strategies after SVB and what they are doing to protect themselves.

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First off, it's safe to say SVB has left an impression on business leaders. According to our recent survey, two thirds (66%) of teams today are concerned about the risk of bank failures. Of all the industries surveyed, the energy, financial services, and government verticals are most concerned about the risk of a bank failure.

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More surprisingly, even though most companies are well aware of diversification as a strategy for long-term financial success, few have actually taken the necessary steps to diversify their cash.

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In fact, 95% of companies surveyed have more than $250,000 in FDIC-protected funds in their primary business bank account. And they aren't barely over the limit. 70% of teams have more than $1M in their primary bank account, and more than half of midsize businesses have about $5 million+ at risk in the event of bank failure. This should ring warning bells for teams.

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It also doesn't help that three out of four SMBs have the bulk of their cash in a single account. Industries with the highest concentration in a single account include commercial goods, hospitality, manufacturing, and transportation. This new data demonstrates the urgency and importance of cash diversification. Without it, teams risk losing the majority of their funds.

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So why aren’t more teams today using diversification strategies to protect their capital from a bank failure? Let’s dive deeper into the survey data.

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The Challenges of Fund Diversification

Diversifying your business's funds offers invaluable benefits, but most importantly provides peace of mind and security for your funds. That said, traditional cash diversification comes with its own set of challenges.

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Tedious and time-consuming logistics. Well over half of finance professionals (60%) surveyed said that account-to-account transfers are inconvenient. Finance teams are often already understaffed and overworked, with little time to focus on creating new bank accounts every time an account’s balance goes over the FDIC-insurance limit. Industries that find it most inconvenient include: manufacturing, commercial goods, and consumer goods.

Limited visibility. Leaders want a full, single line-of-sight across their finances. Unfortunately, until now, that comprehensive view has been out of reach for SMBs when they deposit their cash across multiple accounts. This is likely why three out of four businesses today wish they had a clearer view of aggregate balances and transactions across all of their accounts. Industries most pained include engineering, financial services, and transportation.

Inconvenient reconciliation. Two out of three businesses find that reconciling transactions across multiple accounts is inconvenient. The more accounts you have, the more tedious and confusing this process can get. Industries that find it most inconvenient include consumer goods, agriculture, and manufacturing.

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How Businesses Are Diversifying Their Money

While few businesses today are actively diversifying their funds, the survey did reveal signs of hope. 95% of teams have more than one business bank account, making it easier for them to diversify and protect their funds.

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Even more promising, three out of four businesses surveyed are now thinking of diversifying due to recent banking failures. The larger the business, the more concerned they typically are about risks. The most concerned industries include energy, food and beverage, financial services, manufacturing, and agriculture.

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Today's Business Banking Priorities

Centime's survey also revealed intriguing insights into the banking priorities of finance professionals. According to the data, reputation and stability are the top priorities for businesses in their banking relationships, with 70% of respondents prioritizing these aspects.

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Following closely, 62% of respondents regarded the convenience and ease of online banking as critical, indicative of the digital age we operate in where quick and efficient online transactions are expected.

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Interestingly, despite the critical role of customer service in banking, it was deemed less critical, with only 31% of survey respondents flagging it as a priority.

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New Digital Platforms Streamlining Diversification

After the recent collapse of banks across the nation, it’s no secret that teams are looking for solutions to quickly diversify their cash and unlock a simple line-of-sight across bank accounts. Centime, an all-in-one cash management platform, recently announced a new product set to launch in 2023, to solve just that.

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Centime Banking offers many features that can help businesses protect their cash with ease:

Automated Diversification and Insurance: The $250,000 FDIC deposit insurance limit isn't enough to protect most businesses from bank failure. With Centime Checking Plus, we diversify your deposits across a network of FDIC-insured banks to add more protections to your cash.

Higher Interest Income: Realize a higher return on liquid assets compared to typical business banking accounts.

Unrestricted Access: Centime has no limits on the number of transactions, so you can transfer funds wherever and whenever you need.

Visibility and Reporting: View aggregated and individual balances and transactions across all your banking relationships from a single dashboard, and transfer funds across accounts with ease.

Convenience and Easy Access: Centime Checking Plus accounts are unrestricted and not locked for any period.

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For insights from banking and finance professionals on cash diversification strategies, view Centime's recent webinar.

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**Deposit placement through ICS is subject to the terms, conditions, and disclosures in the applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through ICS satisfies any restrictions on its deposits. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. The depositor may exclude banks from eligibility to receive its funds. IntraFi and ICS are registered service marks, and IntraFi Cash Service is a service mark, of IntraFi Network LLC.

^††3.5% Annual Percentage Yield (APY) as of 11/19/24. Deposit rate may adjust to current market rate and may change daily. Fees may reduce earnings.

*Centime is not a bank and is not authorized by any federal or state agency to engage directly in core banking activities.
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*All banking products and services available through Centime are provided by FNBO and are governed by the applicable agreements and related disclosures provided to you by FNBO. Member FDIC.
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‍*While Centime facilitates traditional banking activities (such as the acceptance of deposits or extensions of credit), these services are actually provided by our banking partner, FNBO.
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*Centime may provide support services to FNBO, as permitted by applicable law, to facilitate the delivery of its bank products and services.

**Deposit placement through ICS is subject to the terms, conditions, and disclosures in the applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through ICS satisfies any restrictions on its deposits. A list identifying IntraFi network bank

The State of Business Banking Today: 2023 Survey Highlights

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