Innovators in small business online delivery

 

Table 55 Watchfire/Gomez Small Business Scorecard Rank Name Score Dec ‘03 Number Sm. Biz Clients 1 (tie) Bank of America 7.6 2.5 mil1 1 (tie) National City 7.6 ina 3 (tie) Key 6.9 ina 3 (tie) Wells Fargo 6.9 1.3 mil2 5 (tie) Chase 6.8 300,0001 5 (tie) Fleet 6.8 450,0002 5 (tie) Wachovia 6.8 800,0001 8 Bank One 6.6 ina 9 (tie) HSBC America 6.0 ina 9 (tie) U.S. Bank 6.0 ina Source: Watchfire, 6/04 <gomezpro.watchfire.com> Other banks evaluated, but not making the top 10: Bank of New York, BB&T, Citibank, Citizens Bank, Comerica, Fifth Third Bank (150,000 clients), LaSalle, PNC Bank (200,000 clients), SunTrust, UBOC, Washington Mutual (250,000 clients) 1American Banker, May 18, 2004, BofA total includes FleetBoston 2American Banker, Oct. 1, 2003

Our first report on small business banking was produced in the fall of 1997 (OBR 29).
At that time, few banks were specifically targeting small businesses. Then, a Yahoo search for “small business” and “banking” yielded only 19 results compared to 2.5 million today. In the late 1990s, most banks were still busy building out their consumer interfaces. Even as recently as 2001 (OBR 70/71), we found few major innovations to report on. Our favorite small business banking service was OneCore http://www.onecore.com/  which was shuttered shortly thereafter, at least as a direct provider.  

Today much has changed. Everywhere you look, banks are innovating to serve the small business market more effectively. According to Watchfire’s GomezPro unit the best small business banking sites are Bank of America and National City, tied for first place in its year-end 2003 scorecard (see Table 55, right). 

Other online innovators in the small business market:

•          Barclays Bank (London; $800 billion) uses its website to target startup businesses with a broad array of support services that many startups would find essential, including a free business checking account for the first year. It’s so impressive, we’ve given it our second Best of the Web award this year
  (see next page).
•          PNC Bank (Pittsburgh, PA; $70 billion) and NetBank have both announced plans to offer remote check deposits, something most U.S. banks will support within a few years. One of the last reasons to visit the branch will be eliminated when clients can feed paper checks into a scanner instantly depositing the cash into their account and storing the image into their online banking archive
  This service is a shoo-in for an OBR Best of the Web once it goes live.
•          NetBank (Alpharetta, GA; $4.1 billion) which launched a new small business initiative a year ago, has attracted 1,600 businesses with $38 million in deposits ($24,000 average deposit). If it keeps to the announced third-quarter launch, NetBank may be the first bank to offer remote paper check scanning

 

 

Barclays provides valuable services for startups

Why do the U.K. banks do a better job serving small businesses online compared to their U.S. counterparts?¹ Perhaps U.S. banks are underestimating the value of services targeted directly to small business owners. Or maybe they’ve found it too difficult because business owners won’t bother switching bank accounts to save a few bucks a month. That’s why it makes so much sense for Barclays Bank to focus on startups at its business website <business.barclays.co.uk>. After all, if you succeed in being a startup’s first bank, you have the inside track to retain its business over time.

Barclays business homepage (see below) is dominated by a shaded area asking the important question, Starting a business? Even though the vast majority of visitors already have a business and a banking relationship with Barclays, those most likely shopping for services are startups. The bank also offers Pain relief in a box, a proprietary business management and accounting program targeted for tiny businesses or startups that haven’t settled on an accounting software system.

¹Two out of three of our Best of Web winners for small businesses are headquartered in the U.K.

 

Barclays’ small business Starter Accounts consist of the following features and benefits:

•          Current account (checking) with an overdraft facility; free for the first 12 months, 18 if you also maintain personal accounts at Barclays
•          Savings account
•          Loans, subject to credit approval of course
•          Insurance
•          45-minute free consultation with a business/marketing consultant
•          45-minute free consultation with an accountant
•          30-minute free consultation with an attorney

 

 

NetBank and PNC to offer remote deposits

According to recent press reports, both NetBank (American Banker, May 20) with 1,600 small business clients and PNC Bank (Wall Street Journal, June 8) with 200,000, will launch remote deposit service for their business customers. Although details of the yet-to-be-launched services are sketchy, it is expected that business customers will be able to scan paper checks into a remote device that transmits images to the bank for immediate deposit. PNC estimates the scanners will rent for $15 to $25 per month. No word on pricing from NetBank. The NetBank service is expected in late third quarter and PNC expects to roll-out by yearend. Alogent http://www.alogent.com/  is the technology provider for NetBank.

Benefits for small business owners:

1.   Saves time/money: Frees business owners from the daily/weekly trek to the branch, something 80% of online self-employed households reported doing during the past 30 days according to Javelin Strategy

2.   Improves cash flow: Checks can be deposited immediately rather than collecting dust waiting for the owner’s next trip to the branch

3.   Streamlines record keeping:

i.    the original check can be filed as a paper receipt if desired

ii.   a back-up electronic image is stored at the bank if questions arrive

4.   Improves customer service: Check images can be quickly retrieved and emailed if
a dispute arises

5.   Saves storage space/cost: Paper checks can be destroyed much sooner, eliminating storage and security issues

6.   Improves management control: Owners can spot-check deposit activity by looking at actual check images, rather than staff-entered accounting entries

Speaking as both as a small business owner and an industry analyst, this is a great service and a strong candidate for a Best of the Web award once it becomes operational.