According to our survey, 3 out of 4 finance pros would switch banks to get better fintech
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Introduction
In an evolving financial landscape, understanding what matters most to business finance professionals in their bank partnerships is crucial. Our survey aimed to uncover these priorities, focusing on the elements that drive satisfaction and loyalty among these key decision-makers. By gathering insights from finance and accounting professionals, we sought to identify the factors that influence their banking relationships and determine how banks can better serve their business clients.
We surveyed 378 finance and accounting professionals from small to mid-size businesses with annual revenues between $5 million and $100 million. These respondents, all of whom hold decision-making authority or influence over banking relationships, provided valuable perspectives on their expectations and experiences with their banking partners.
The findings in this report reveal critical insights into the current state of business banking relationships. While overall satisfaction appears high, deeper analysis shows significant areas for improvement, particularly in the realm of technology. The data highlights the importance of advanced financial tools and the willingness of finance professionals to switch banks for better technological solutions. As we delve into these findings, banks can gain actionable insights to enhance their offerings and strengthen customer loyalty.
A Look Back: Key Insights from Our 2023 Survey
Before we delve into the findings from our 2024 report, it’s helpful to remind our readers of previously published insights from our 2023 State of Business Banking Report, which provided valuable insights into the banking habits of businesses, offering a foundation to gauge the progress and shifts seen in the past year.
In 2023, our survey revealed that:
- Most businesses have multiple bank accounts, with 95% holding more than one, and a significant portion, particularly mid-sized businesses, managing five or more accounts.
- Cash concentration was high, with 70% of businesses holding more than $1 million in their primary bank accounts, and a concerning 95% exceeding the $250,000 FDIC insurance limit in their primary operating accounts, putting their cash at risk in the event of bank failure.
- Concerns about risk were amplified in the wake of the Silicon Valley Bank failure, and 2 out of 3 finance pros expressed fears about bank failure risk.
- Despite these figures, three out of four businesses expressed a desire for clearer visibility across their multiple accounts, highlighting the complexities and inefficiencies they face in managing their finances.
These findings underscored the importance of robust cash management tools and advanced financial solutions to meet the growing demands of business banking clients. Building on this foundation, our 2024 banking customer survey takes a deeper dive into how businesses perceive their banking partners today and what this means for banks aiming to retain and grow their customer base.
Overall Satisfaction in 2024: Peeling Back the Layers
Our latest survey reveals, at first glance, that most businesses are generally happy with their bank partners, with 92% of respondents expressing general contentment with their banking relationships. However, as you’ll see when we dive deeper into the data, this general satisfaction might not tell the full story of the underlying concerns that could lead to client attrition if not addressed.
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Technology as a Differentiator
A deeper analysis reveals that while overall satisfaction is high, it’s closely tied to the availability of advanced technological solutions:
- 85% of finance professionals emphasized the importance of their bank offering cutting-edge technology to improve financial operations.
Customer Loyalty at Risk
The survey further indicates that 3 out of 4 decision-makers and influencers are open to switching banks if another institution offers superior technology.
This is a crucial insight for banks looking to retain their business clients, as the willingness to switch is significant and signals potential vulnerabilities.
These findings suggest that while banks are meeting basic expectations, they must continuously innovate and invest in technology to maintain and grow their client base.
The Technology Gap: AP and AR Automation – A Missed Opportunity
One of the most concerning findings from our survey is the significant gap in awareness and availability of essential financial tools like Accounts Payable (AP) and Accounts Receivable (AR) automation.
- 47% of respondents either don’t have or are unaware of AP automation offerings from their banks.
- 58% report similar issues with AR automation.
An informal poll of bankers at the McKinsey Cash Management Forum in July of 2024 suggested that AP and AR are top-of-mind for banks that want to offer cutting-edge solutions to their clients.
Implications of the Technology Gap
This gap highlights a critical area where banks can differentiate themselves. Offering these tools can not only improve customer satisfaction but also establish the bank as a forward-thinking partner in managing financial operations.
Impact on Satisfaction and Loyalty
Banks that offer AP and AR automation tools see a marked improvement in customer satisfaction:
- Customers with access to AP automation are 83% more likely to strongly agree that their bank provides the best financial tools for managing their business.
- Those with AR automation are 2x more likely to view their bank as a trusted advisor in technology selection.
This data clearly demonstrates the competitive advantage that automation tools provide, making it an area ripe for investment.
Bank Type Analysis: National, Regional, Community, and Fintech Banks
The survey also breaks down customer satisfaction and awareness by the type of bank—National, Regional, Community, and Fintech—each offering distinct insights.
Satisfaction and Technology Awareness by Bank Type
- National Banks: Although these banks have a broad reach, their customers are at the highest risk of churn, with 81% stating they would consider switching for better technology.
- Regional Banks: Slightly less vulnerable, 77% of their customers would still consider switching for superior tech solutions.
- Community Banks: While they enjoy somewhat more loyalty, 55% of their customers are open to switching, which is still a significant number.
- Fintechs: These institutions lead in customer satisfaction, with higher awareness of their service offerings, indicating a stronger alignment with customer needs.
The Fintech Advantage
Fintechs, in particular, stand out for their high customer satisfaction rates, likely due to their inherent focus on technology. These banks are perceived as more innovative and responsive to the evolving needs of their customers, offering a model for traditional banks to emulate.
Industry-Specific Insights: Targeted Strategies for Different Sectors
The survey also provides valuable insights into satisfaction and switching likelihood across various industries. These findings suggest that banks should tailor their strategies to the specific needs of each industry.
Least Satisfied Industries
- Agriculture, Arts, Technology, and Transportation: These sectors reported the lowest satisfaction levels, indicating a potential gap in service or technology offerings that could be addressed.
Industries Most Likely to Switch
- Commercial Goods, Energy, Financial Services, Consumer Goods, and Hospitality: These industries are most likely to switch banks if offered better technology solutions.
Industries That View Their Bank as a Trusted Partner
- Energy, Food and Beverage, Accounting, Financial Services: These sectors reported higher satisfaction levels and are more likely to view their bank as a trusted advisor, particularly if the bank offers AP and AR automation.
Strategic Implications
Banks targeting the most at-risk industries should prioritize the integration of advanced technology solutions and enhanced customer service to improve satisfaction and loyalty. Conversely, banks with a strong foothold in sectors that view them as trusted partners should focus on deepening these relationships by continuing to innovate and offer tailored solutions.
Key Takeaways: The Path Forward for Banks
The 2024 Banking Customer Survey underscores the critical role of technology in maintaining and growing banking relationships. Banks that fail to adapt to these expectations risk losing customers to more tech-savvy competitors.
Actionable Insights for Banks
- Invest in adding AP and AR Automation solutions like Centime to your portfolio: Closing the technology gap is not just an option; it’s a necessity for retaining business clients.
- Leverage Industry-Specific Data: Tailoring your offerings to the specific needs of different industries can provide a competitive edge.
- Partner with Fintechs (don’t fear them!): Traditional banks can learn from Fintechs’ approach to technology and customer satisfaction, integrating similar strategies to boost their appeal.
By following these insights, banks can strengthen their customer relationships, reduce churn, and position themselves as leaders in the business banking space.
