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Small Businesses: Still Banking on Branches

September 28, 2016

The branch remains an essential component in the channel mix for small businesses, according to a recent survey entitled, Small Business Channel Dynamics.

The branch remains an essential component in the channel mix for small businesses, according to a recent survey by Phoenix SYNERGISTICS Research entitled, Small Business Channel Dynamics.  Small business respondents report that someone in their company visits a branch or office an average of 5.4 times per month (median = 4.0), an activity level relatively unchanged from previous findings in the SYNERGISTICS 2013 study, Optimizing Small Business Channels.  Fewer than one-tenth in the 2016 survey claim that they never visit a branch; one-fifth report relatively light usage of less than one visit per month.  Average frequency of branch visits is directly related to annual sales volume and number of employees; it is also somewhat higher among retailers.  A small majority report that they use more than one branch location. In addition, branch locations play a key role in acquiring and retaining small business relationships. Six in ten small businesses report branch location was “very” important when selecting a bank with which to do business. A similar number indicate branch locations are “very” important in continuing to do business with a bank.

Click here to see graph. 

Genie M. Driskill, COO of Phoenix SYNERGISTICS, stated, “The branch remains a very frequent contact point with small business customers.  Although the objective to achieve cost savings in relation to branch networks remains valid, prudence should be used where small business customers account for a significant part of any given provider’s market footprint.  There is potential to shift some routine activities – such as deposits to remote deposit capture – but the branch and face-to-face contact are important for relationship acquisition and expansion in the small business market.”

These are among the findings from Phoenix SYNERGISTICS study, Small Business Channel Dynamics, featuring online interviews with 603 small business owners and executives of companies with annual sales of $50K to $5M.  This study examines small business usage of various channels including the branch, ATMs, online banking, and mobile banking.  In addition, the response of small businesses to various innovations such as tablet banking, self-service options at the branch, and remote deposit is evaluated.

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