Small-business mobile banking promises to be an important revenue driver, with one-third of U.S. small businesses willing to pay for the service.
Boston, MA, September 9, 2009 – A new report from Aite Group, LLC analyzes the types of mobile banking transactions small businesses are most willing to adopt, and how that willingness varies by business size. Based primarily on the results of a July 2009 survey of 283 U.S. small businesses (defined as any business generating less than US$10 million in annual revenues), the report also points out challenges, such as misperceptions about mobile security, that banks will have to overcome to ensure a successful deployment. Finally, the report examines small-business willingness to pay for mobile banking/transaction service, expected adoption rates and estimated deployment costs and potential revenues for banks seeking to calculate return on investment (ROI).
Many institutions have deployed mobile banking services as a must-have to "keep up with the Joneses." As a consequence, retail mobile banking services have become commoditized, compressing vendor revenue opportunities. Mobile small-business banking may reverse this trend, allowing banks to re-invest in the mobile channel and open up tightly controlled budgets. To date, banks' failure to offer mobile banking services to small-business customers has not only resulted in lost potential revenues, but also missed opportunities to deepen relationships and achieve greater cross-selling success with this important customer segment. More than one-third of U.S. small businesses would be willing to consider using mobile banking if it were offered by their primary institution, and 27% would even be willing to pay for the service.
"Most banks recognize the additional convenience they can offer to customers by proffering mobile banking capabilities," says Christine Barry, research director with Aite Group and co-author of this report. "Despite this, many U.S. banks have been slow to roll out mobile offerings, especially to small-business customers."
Nick Holland, senior analyst with Aite Group and co-author of this report, adds, "Small businesses are looking for a host of extra functionalities above and beyond the requirements of vanilla mobile banking, such as wire approvals and positive pay. Banks will be looking to monetize small-business mobile banking, and an offering that does not justify end-users paying for the service is unlikely to receive implementation."
This 24-page Impact Note contains 15 figures. Clients of Aite Group's Wholesale Banking service can download the report.