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Keeping Millennial SMBs Starts with Better Mobile Business Payments

Millennials are quickly becoming the face of small businesses in America. For banks, this marks a sea of change in one of their largest and most important customer segments.

Unlike their predecessors, this generation doesn’t write checks. Millennial small business owners are full-fledged digital natives. They have grown up with consumer technology and their expectations have been informed almost entirely by consumer apps and interfaces.

This presents major challenges for banks looking to retain their SMB customer base in the coming years. These digital natives won’t tolerate the stripped down customer experience of traditional enterprise apps.

To explore this trend, my company, Bill.com, recently partnered with Aite Group to examine the current state of mobile payments in the small business segment, with a specific focus on how SMB-specific mobile banking and payments solutions impact customer loyalty.

Key takeaways from the study include:

  • Despite rising mobile adoption by small businesses, usage has been limited primarily to basic functionality, such as checking balances.
  • While 26% of small businesses make at least one mobile payment per month, mobile payments represent only 1% of all small-business payments.
  • Security concerns have negatively impacted mobile payments adoption to date, but limited functionality has weakened the value proposition.
  • There are three key areas where banks should focus to enhance their mobile offerings to drive greater mobile payments adoption: (1) easier access to the information necessary to perform mobile transactions, (2) more convenient/user-friendly interfaces, and (3) more flexibility/collaboration capabilities.

The findings of our study highlight the challenge (and opportunity) facing banks as the tides change on their SMB customer base. Millennial small business owners demand better mobile experiences from their banks. Today, however, most mobile offerings are limited to basic capabilities, such as checking balances. This lack of SMB-specific functionality, especially in digital payments, impedes mobile adoption and drives away customers.

At the same time, banks that can deliver SMB-specific mobile banking and payments solutions, and do so in an incredibly user-friendly way, have a major opportunity to capture market share and increase customer loyalty. As limited as the current mobile use is, the majority (60%) of SMB owners already consider mobile capabilities to be ‘important’ when choosing a bank.

While demand is clear, the challenge of delivering better digital offerings persists. This is where banks must consider third-party providers. Luckily, the FinTech boom of recent years makes this a buyer’s market.

Today, there is a vast ecosystem of service providers that can help banks of all sizes modernize nearly every layer of the stack. The infrastructure now exists for banks to find and integrate the best technology for their customers, even as that customer base grows more demanding.

Banks that succeed in leveraging this ecosystem to improve their mobile SMB offerings have much to gain in the years ahead – including the business banking customers of their less agile competition.

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