The fate of small businesses is a pressing issue for financial institutions across the country. In the midst of a global pandemic, banks stepped up to provide relief to these enterprises through SBA and PPP loans as they became available.
While these are temporary measures to help small businesses, one outcome from the pandemic is here to stay: the need for processing payments online. Unfortunately, many financial institutions aren’t able to offer small businesses the tools that they need for ecommerce, leaving businesses to turn to non-bank competitors. By offering the virtual capabilities that these companies need, financial institutions can retain small business customers and improve their bottom line.
The need for online payments
Small businesses continue to need digital banking solutions that help them better manage their finances and operations in a virtual capacity—particularly when it comes to accepting payments. However since 81% of small businesses are so small that they don’t even have employees, they often don’t require the same complex treasury management as larger corporations.
In order to survive, small businesses need to have a better capacity to accept online payments quickly and with greater ease through their financial institutions. Without these capabilities, business owners are forced to quickly find non-bank alternatives to your services, which ultimately leads to fewer deposits, a loss of non-interest fee income, and a reduced number of lending opportunities.
The online payment landscape
Competition for providing online payment functionality is constantly increasing, and financial institutions that can establish depository and transactional relationships with their customers will be the most likely to retain their clients as large tech companies move in.
Small and micro-businesses now have intermediary options such as QuickBooks and PayPal when it comes to easily depositing online payments. Currently, many of these competitors offer deposit, credit, and lending products that directly compete with financial institutions as well. When your bank can provide online transactional services in addition to classic offerings, your small business clients are much more likely to continue working with you.
The case for offering small businesses online payments
By offering small businesses online payment solutions, your institution can facilitate a higher number of deposits and generate non-interest income from these companies. This underserved segment of the market can thus find more opportunities to go through your bank with your updated services—increasing profitability on all sides. While many financial institutions brace for lowering interest rates, this additional stream of revenue can make a difference in the long-term success of your bank.
Small businesses need digital banking solutions that help small businesses better manage their business finances and operations, especially when it comes to accepting customer payments. Making sure you supply these capabilities for your small business clients is crucial to your bank’s success in 2021 and beyond.
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