The Top 4 Reasons Why Small Businesses Prefer Hometown Banks

Modern banking is seeing an influx of banking customers switch to online banking and mobile apps to complete transactions. However, small business see face-to-face banking with their local branch as highly valuable for a variety of reasons. In fact, research finds that less than 25% of small businesses surveyed use mobile banking, with only 8% using mobile bill pay. Here are some of the reasons that small businesses prefer local banks:

A Preference For In-Person Banking

Small businesses often favor meeting with their bank in-person, at their local branch. In fact, most of their professional banking activity occurs at a local branch. This shows that while branches may not get as much foot traffic in the past, there are still customers who greatly value this face-to-cafe banking interaction.

Fees Are Not Their Greatest Concern

The average personal account holder considers fees one of their greatest concerns, however, small businesses are the opposite. Most small businesses will gladly pay fees when they see value in the services these fees are paying for.  

A Preference For Traditional Methods

While small businesses have incorporated new technologies like online banking, for the majority of their business transactions, they prefer traditional methods of banking. This includes meeting with agents at local branches, calling customer service, and accepting (and making) payments with traditional paper checks, creating a strong paper trail. These methods are hard to replicate with an app and many businesses do not make use of such tools.

Local Bank, Small Business Relationship

Small businesses understand that by supporting their local bank, they’re investing in their community, just like local banks like to invest in their local small businesses. This creates a mutually beneficial relationship. Small businesses also appreciate that lending decisions are made locally, when dealing with a hometown bank.

While emerging banking technologies, in the online and mobile space, have changed the behavior of retail consumers, small businesses continue to be quite conservative, valuing proximity to their bank’s branches, access to quick “local” decisions on credit, and help with problem resolution.