Evaluating Banks
• The characteristics of a financial institution most important to small-business owners in the conduct of their banking business are in order: convenient location, knows you and your business, reliable source of credit, speed of decision-making, easy access to loan officer, and offers a wide range of services.
• The characteristics on which small-business owners’ principal banks are most likely to perform well are in order: convenient location, offers a wide range of services, reliable source of credit, knows the local market or community, speed of decision-making, and knows you and your business.
• The largest shortfall between what small-business owners think important in a bank and level of their principal bank’s performance are: knows you and your business, speed of decision-making, and offers cheapest money available. The match between importance of bank characteristic and level of bank performance is similar on all other characteristics evaluated.
• While a majority of owners believe the overall level of service quality at their principal bank is unchanged over the last three years, the percent of small-business owners providing favorable evaluations exceed those providing negative evaluations by a 33 percent to 11 percent margin. The most rapidly improving aspect of service quality is the growing number of bank services available. The only deteriorating aspect of service quality change is staff turnover.
• Just over half (51%) wanted or needed to borrow for business purposes during the last three years. Eighty-five (85) percent of potential borrowers obtained the last loan they requested. Sixty-two (62) percent of potential borrowers obtained the loans they sought all the time; 28 percent did most of the time; 3 percent often did not get what they wanted; and, 8 percent (or 4% of all small employers) could never borrow the money they wanted.
• Half (50%) enjoyed a single account manager over the last three years and another 30 had two. In contrast, at least 7 percent never had an account manager and another 13 percent experienced three or more.
• Small-business owners are hesitatingly adapting to electronic banking. A majority (54%) say that technology at their principal bank has been increasingly helpful in conducting their banking business, while 11 percent believe technology is increasingly getting in the way. The remainder report technology is having no affect on them. However, only half do any electronic banking and only 7 percent have applied for credit on-line. Eighty-three (83) percent believe that banks are not forcing technology on them.
• Sixty-two (62) percent of small employers bank within less than 10 minutes of their business location, an outcome consistent with the importance of knows you and your business and the slow adaptation of technology in conducting their banking business.
