Four Golden Keys to Successful Small Business Banking

August 15, 2006


Bankers can unlock small business banking with four keys -- a treasure trove, according to Celent, because small business banks earn margins that are up to 10 percentage points above average.

Unlocking the treasures of small business banking is no easy feat. Otherwise, more banks would excel at it. The keys require an alchemy of high touch and high tech. In the report, Celent examines the keys to "high touch" by speaking with leading bank "alchemists" who have forged four golden keys. First, get the basics right: simple and smart.

"A ripe area for smarts is payments. Few banks offer payment services tailored for small businesses. Instead they offer retail services. Consequently, there is opportunity in a variety of payment initiatives, such as reward-based cards and remote deposit capture," says Alenka Grealish, author of the report and manager of the Banking group at Celent.

Second, make small business banking a line of business. Across the banks successful in small business banking, there is consensus that small business must be run as a separate line of business with its own dedicated sales and service teams as well as credit processing department.

Third, build mutually rewarding bridges between the branch and the small business bankers. Ensuring a win-win relationship requires measuring (including double counting) and rewarding collaborative behavior and attendant results.

And fourth, capture both business and personal banking business. About 10% of small business owners are affluent. The challenge is capturing the roughly 50% who would consider consolidating their financial needs in one bank.

"Opportunities in small business banking will continue to present themselves, and the alchemists will have to adapt their ingredients accordingly. Currently, the prime area to transform is payments. Three 'base metals' will be transformed into gold: remote deposit capture, reward-based cards, and e-payments. The transformation will have a secondary effect that bankers will need to be prepared for. As small businesses rely less and less on the check, banks' interactions will migrate from being branch-based to being remote. Leaders today recognize that a shift in channels will occur and are preparing by upgrading their online banking platform and improving the capabilities of their call center staff," Grealish adds.

The report is 25 pages long and contains nine figures and two tables.

A table of contents is available online.


Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents


Executive Summary 3
Small Business Banking Economics 5
  Value of a Small Business Customer 5
  Small Business Is Good Business 6
  Importance of Business Deposits 8
Basics: Simple and Smart 10
  Simple: Stellar Service 10
  Simple: Straightforward Account Structures 11
  Simple But Not Necessarily Smart: Free Checking 12
  Smart: Reward-Based Cards 12
  Smart: Remote Capture 13
Small Business as Line of Business 15
  Leadership 15
  The Sales and Service Organization 15
Branch Collaboration and Incentives 18
Joint Selling of Personal and Business Banking 20
  The Foundation: Getting the Process Right 20
  The Pillars of Best Practices 21
Conclusions 23
Objectivity and Methodology 24

Sign in to download reports and access personalized information