Nonbank FINANCIAL INSTItutions are snatching billions of small business dollars from traditional banks, according to a new study by the Bank Administration Institute and McKinsey & Company. The solution to gain market share? New products, approaches and technologies that give small businesses what they want-when they want it. "We're talking $100 to 200 billion of potential financial services revenue in the small business market," says BAI evp David Taylor. "This has traditionally been a good business for banks of all sizes but the fact of the matter is it could get a whole lot better."
The study, called "Unlocking Winning Strategies to Serve Small Businesses," notes the decreased importance of geographical connections between banks and small business customers, as well as the increasing emphasis on new strategies. A shift in marketing strategy that also maximizes new technologies could help banks haul in the 60 percent of revenue connected to small business-dollars that are presently captured by nonbanks.