US Small Business Banking Vendors 2004: Strategies for Survival

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3 November 2004


New York, NY, USA November 3, 2004

Banks Increase Their Focus on Small Businesses

In an effort to better serve small business customers, Celent estimates that 30 percent of banks have either created separate business units or restructured the servicing of this customer base from retail to corporate banking.

Celents latest report, , examines banks efforts to generate additional revenues by focusing greater attention on the once-ignored and relatively untapped small business customer segment. It analyzes bank restructuring, banks more targeted marketing efforts, and the deployment of browser-based banking solutions designed specifically with the needs of small businesses in mind. The solutions as well as the technology providers are analyzed and ranked according to seven major criteria: number of successful deployments/experience in the industry, depth of solution features, financial viability of the vendor, solution customization/flexibility, level of client support provided, and solution ease of use.

While most small businesses still consider the branch their preferred banking channel, increased efforts from banks and improved solutions have led to a rise in online banking adoption by this group, from 3.3 percent in 2001 to 16 percent today. "Even the largest banks are recognizing the revenue potential of this customer segment, which spends approximately US$270 billion annually on financial services products," states Christine Barry, wholesale banking analyst and author of the report. "There is an obvious effort by these banks to win back the segments loyalty and reduce attrition to smaller banks perceived to provide superior customer servicea factor extremely important to small businesses," adds Barry.

New small business banking solutions are designed to meet the specific needs of these businesses as well as their often-limited budgets. Over the last year, great emphasis has been placed on solution usability. Also important has been depth of functionality and the ability to create targeted packages, allowing a bank to offer more sophisticated capabilities as a customers needs grow. Celent has ranked the following vendors as the top small business banking technology providers:

Ranking Vendor
1 S1
2 Digital Insight
3 Politzer & Haney
Source: Celent Communications

This 57-page report contains five figures and 24 tables. A table of contents is available online.

of Celent Communications' Wholesale Banking research service can download the report electronically by clicking on the icon to the left. Non-members should contact for more information.