Large bank loan approval rates are up for small business borrowers, yet a new report shows that many business owners are searching for better bank services. The FIS research, published last week, found that while most SMEs use a global bank for financial services, many of them are switching banks in search of better high-tech products and services.
The Performance Against Customer Expectations (PACE) Report surveyed nearly 500 SMEs in the U.S. with revenues up to $500 million. The data shows that 14 percent of SMBs switched banks in the past 12 months, and a bigger percentage said they are considering moving to a different bank in the next year. Younger businesses were more likely to make a change; 32 percent of early life cycle SMBs using a global bank said they have changed providers in the last year.
“It’s no secret that, following the financial crisis, small and mid-sized business owners have been long on complaints and short on love for their banks,” said FIS Chief Operating Officer of Banking and Payments Anthony Jabbour. “While lending restrictions seem to be easing somewhat recently, SMBs have struggled mightily in terms of getting approved for business loans.”
According to analysts, small business owners are concerned about more than rejected loan applications and high fees; millennial entrepreneurs in particular want enhanced mobile experiences from their primary banks. Forty-eight percent of SMEs surveyed cited a lack of products and services as their main reason for switching or considering switching banks.
The report is in line with data released from ACI Worldwide last spring, showing that 50 percent of SMEs would like their banking provider to offer more services that meet their unique needs. Additionally, 65 percent of small business owners across the U.S. and Europe said they would switch banks if they could access more high-tech services such as faster payment capabilities.