In the United States, small and medium businesses (SMBs) made up 99.7% of all businesses with paid employees (SBA, 2020), while in Canada they made up 99,8% (ISED Canada, 2022). Attracting and retaining this group is, therefore, vital to financial institutions. But despite the importance of SMBs to business banking, many business banking customers feel unsatisfied with their financial institutions.

According to a survey by PwC, 22% of surveyed SMBs were considering switching banks in the next 12 months. In our own 2022 survey, we found that 95% of surveyed small businesses would probably change financial institutions for a more complete funding experience that includes access to relevant grants, tax credits, and government loans.

Businesses are searching for tools and services that simplify their lives. If a financial institution makes it too complicated to open accounts, get financing, or integrate other tools, business clients will not be motivated or inspired to stay.

Here are five ways that financial institutions can attract—and retain—business banking clients.

1. Know what small businesses want

Small businesses have particular needs when it comes to banking products—low rates and fees, high-quality service, convenience, and funding. In our 2022 survey, we asked small businesses what they value most in their financial institutions. “Low fees” was the number one choice, selected by 37% of respondents, followed by both “knowledgeable advisors” and “loan options” with 23% of votes each. These needs can even differ between industries.

As a financial institution, you must be aware of these needs and ensure that your product offering meets them. For example, a bank might offer specialized lending products for restaurants or online payment processing solutions for e-commerce businesses. By developing services with small businesses in mind, you’ll better match your products to your potential customer’s needs and stand out against the competition.

2. Simplify the lending process

According to our 2022 survey, finding funding is one of the greatest challenges for small businesses. In addition to products such as business banking accounts and credit cards, small businesses work with banks in hopes of receiving loans so that they can grow and expand. Financial institutions can use pre-qualification and digitalization to make it faster and easier for small businesses to obtain loans.

3. Invest in your digital platform

Nowadays, everything is moving to digital—education, medical consultations and even therapy. It is no surprise that digital banking has also become a requirement for financial institutions, and demand for digital accessibility will only rise. Are you prepared for this move to digital?

Small businesses are looking for institutions that provide both essential banking services and business-specific services, such as payroll platforms, cash management solutions, funding finders, and foreign currency exchange services, online.

You can expand your digital platform through partnerships with fintech companies, digital solution acquisitions and in-house platform development. Consider working with companies like Fundica, a funding search engine that helps entrepreneurs find public-sector funding. This helpful tool will make you stand out against competitors and create lasting relationships with growing companies.  

The best part? Fundica requires absolutely no integration, making digital platform expansion as easy as possible. Partnerships are by far the easiest and most cost-effective way of implementing new digital products or features.

4. Personalize your service

Banks can attract small business clients by building strong, long-lasting relationships. This might involve providing regular financial education and training or offering personalized advice and support to help small businesses grow and succeed.

We have already discussed how small businesses have particular needs, but do not forget that each company also has unique requirements based on its business model, industry, and more. Make sure that you have expert advisors available to support and advise your clients.

5. Make an offer they cannot resist

Imagine you are an entrepreneur looking to start a business banking account. Depending on the location, you need to consider and sort through hundreds of financial institutions to find the best option for your small business. Do you look for an institution that offers competitive fees and rates, accounts that match your needs, a comprehensive range of services, and expert advisors? What happens when there are still too many options?

Entrepreneurs will be swayed by deals—those extra savings, bonuses, or free services—that enhance their banking experience and let them save every dollar they can. You attract their business when you offer perks to small businesses that open new accounts. Then by implementing reward programs, you can keep their business. In creating incentive programs, you can develop lasting relationships with your clients.

Make it easy for small businesses

The key takeaway is that business banking should be as easy and painless as possible—small business owners already have a lot on their plate. They want their financial institution to help lessen that load through a stellar product offering, personalized services, and ease of access. Perks do not hurt, either!