Although Internet banking has become a critical channel for many small and mid-sized companies, very few of these companies use social media, mobile banking or other emerging technologies as part of their business banking. That could soon change.
Some of the countrys largest banks are making major investments in technology that would incorporate elements of both mobile technology and social networking into their business banking platforms and they are doing so well in advance of any real expression of demand from their customer base. The reason: Banks see new technology platforms as both a huge opportunity and a potentially dangerous threat.
The Rise of the Internet Platform
Internet banking has rapidly evolved to become a core channel of the business banking relationship. In some ways, Internet platforms have become the primary channel: It now ranks as the most frequently used banking channel for small and mid-sized U.S. companies. Two-thirds of mid-sized businesses and approximately 60% of small business use their banks Internet platforms very frequently, topping usage rates for bank branches, relationship managers, call centers, and e-mail by a wide margin. While both small and mid-sized businesses still cite their Relationship manager as their most important point of contact with their banks, Internet platforms have become the preferred channel for dealing with day-to-day banking issues such as investigating the status of an unpaid check.
The Next Wave: Mobile Banking and Social Networking
Based on the speed with which Internet platforms and advances such as remote deposit have changed the industry, large banks are determined to be prepared for the next wave of transformative technology.
Two-thirds of small and mid-sized businesses think social media applications will have a direct impact on the banking industry in the next 12 months. Approximately 40% of small businesses and about a quarter of mid-sized companies would consider using mobile banking if it were offered by their current banking providers.
The incorporation of mobile banking and social networking into bank technology platforms should allow banks to deepen their relationships with customers. The application of these technologies could allow businesses to more fully integrate information from their own bank accounts and services from their banking providers into their daily work flows.
In fact, some large banks think these technologies will have so much resonance with a new generation already hooked on the likes of Facebook, Twitter and LinkedIn that they are beginning to recognize the providers of such platforms as potential rivals.
For the moment, however, both the threat and the opportunity remain matters of long-term possibility. Only 45% of the 560 small and mid-sized companies participating in the Greenwich Associates study currently use mobile banking, and the share of these businesses using any social networking technology as a direct part of their banking is even smaller. That is not to say these technologies are without influence in todays business banking industry. More than 20% of small and mid-sized businesses say they use social media for networking with other executives and entrepreneurs.
D.C.