Small Business Financial Platforms: Overcoming Obstacles to Adoption and Penetration
Boston, MA, USA December 27, 2001
This report reflects on the current state of online financial platforms for small businesses and identifies key factors blocking their usage.
In a new report entitled, " ," Celent explores the factors blocking small business usage of online financial platforms. In addition, the report analyzes the initial strategies of brick-and-mortar financial institutions, Internet-only banks, and online portals and provides an update on how those players have fared given the lower-than-anticipated adoption rates.
We estimate that US$3.0 billion has been spent on building and marketing online financial platforms, yet to date only one million, or 4%, of small businesses use these online platforms, comments Pamela Brewster, author of the report. Simply offering a platform is not enough. A concerted effort must be made to reach out to small business customers, understand their needs and concerns, and change the platform accordingly. Otherwise, adoption rates will remain low.
Celent offers recommendations for spurring online utilization including: 1) building more reliable platforms; 2) demonstrating the value of the platform to small businesses, and 3) providing channel integration. The report also examines whether a provider can achieve a return on investment (ROI) on these platforms. Revenue and cost factors are considered along with potential customer penetration rates and usage of online financial services including e-401(k), online bill payment, payroll, and merchant services.
"In general, if the platform is used primarily to obtain information and pay bills, then ROI will be minimal at best," adds Pamela Brewster. "However, if the platform spurs transaction activity, then it may become a profit center."
The report concludes with a look at the evolutionary track Celent believes online financial platforms will follow during the next 18-24 months.
A Table of Contents is available online.
of Celent Communication's Wholesale Banking research service can download the report electronically by clicking on the icon to the left.