Banks Market to Small Businesses

Small businesses have traditionally been given the cold shoulder by large banks. But thanks to new offerings from electronic banking vendors, things are beginning to change, according to a new report issued by Cambridge, Mass.-based Celent Communications.

Small businesses can be a boon for banks because they have higher balances, make more transactions and borrow more than retail customers, said Celent analyst Meredith Hickman.

These characteristics "combined with Internet growth " have pushed small-business needs to the forefront of many banks' e-commerce strategies, she said.

Among the services banks offer are browser-based account access, online payroll, small-business portals and wireless access to banking information, said Hickman.

Part of what makes this possible is the proliferation of ready-to-use electronic banking service providers.

The top vendor, according to Hickman, is S1 Corp. in Atlanta, which has more than 300 banking clients using the cash-management system from its Q Up subsidiary in Texas.

The next biggest operator is Digital Insight Corp. in California, with 160 companies utilizing its Axis Cash Management system.

The only other firm of the 14 Hickman ranked that boasted more than 100 clients was FundsXpress Financial Network Inc. The Austin-based company reported 119 clients using its FundsXpress Commercial Banking product.

Of the three firms, Digital Insight offered the most services, such as account reconciliation and automated sweep instructions.

Paul Jamieson, an analyst at Lincoln, Mass.-based Gomez Advisors Inc., disagreed with the report, saying that most banks see small businesses "as a crucial and very profitable market." Though as far as online operations are concerned, Jamieson said, "the demand for online services has not met expectations."

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about Celent CommunicationsDigital InsightGomez AdvisorsMeredithS1 Corp

Show Comments