Published On: August 17th, 2022

Financial Wellness: Small Business

Helping the Economy’s Largest Employer

Despite what the Fed and Wall Street may be thinking, small businesses are not bullish about the near-term future. Results from the CNBC|SurveyMonkey Small Business Index for Q3, released in early August, revealed that a majority consider the economy to be “poor”, with even more believing that a recession has already arrived. Caught between increasing costs, supply chain issues, and customers that are beginning to reduce their spending, small businesses are getting hit from all sides. With SMEs (<100 employees) accounting for nearly 53% of employment in the US, banks and credit unions would do well to focus on helping their small business customers. What can we do – right now – to help our economy’s largest group of employers?

Financial Wellness

We hear quite a bit about Financial Wellness but the focus is always on households. Yet, small businesses are just as much in need of the same financial education and advice, and financial institutions should be extending this type of support to their SME customers. A recent EY Insights article underscored the point, observing that “banks must…remain conscious of the differences in…financial literacy among their SME clients.”

The digital channel is a perfect place for offering articles and advice on cash flow, inventory management, employee benefit programs, and making estimated tax payments. In addition, tools that support planning and budgeting, the trade-offs between leasing and buying equipment, and whether to take advantage of trade discounts can also be of enormous value to a small business.

Doing Business on SME Hours

Anyone who has ever run a small business knows that the critical hours for engaging customers and generating revenue run six days a week, from 8am through 7pm. It is no wonder, then, that EY’s 2019 Global FinTech Adoption study revealed that 23% of US SMEs had already engaged with a non-bank provider. Much of the reason lies in FinTech’s investment in non-physical channels, which means they are available after hours and on weekends. They have flipped the calendar and are doing business on SME banking hours.

Banks and credit unions can compete by improving their digital channels beyond basic small business marketing speak. Journeys that allow a business owner to evaluate relevant and personalized equipment financial options or recommend specific, tailored merchant services solutions based on transaction types and volumes can be quickly implemented. When these journeys are paired with an OAO solution, banks can enable a virtual shift in their operating hours – all while increasing new account openings and improving customer satisfaction.

Small Businesses Have Jumped Ahead In Digital

The global pandemic spurred small businesses to go digital quickly to survive. Even local restaurants have digitized menus and payments, stood up online ordering systems, and are running robust e-commerce businesses. EY observed that this transformation was also having an impact on their interactions with providers, finding that “a majority of SMEs now expect to be able to engage with their banks through a variety of digital channels.” And that shift is coming at the expense of in-branch interactions, with 38% saying that they have decreased their visits.

Banks and credit unions have an opportunity to seize the moment by improving their support for small businesses and moving with their customers. With a broader set of offerings and more resources to bring to bear than FinTechs, established FI’s are much better positioned to holistically help small businesses achieve their goals.

Small Business Owners Reviewing Their Finances