High Tech Keys to Small Business Banking: Upgrading the Online Channel

by Jacob Jegher, February 26, 2007

Abstract

Online small business banking is flourishing.

After fits and starts since the late 1990s, online small business banking is coming into its own and is no longer overshadowed by online retail banking. Innovative banks are addressing shortcomings and boosting adoption rates to over 50%. The online channel is increasingly becoming the tool to enhance small business services without increasing cost to serve. The online channel is becoming the financial lifeline of small business.

High touch will continue to matter to small businesses (most banks report that over 80% of their small businesses visit a branch at least once a week), but they are becoming swayed by high tech as well. Small businesses are increasingly making decisions of where to bank based on the features and usability provided by online banking technology.

Over the past five years, small business online banking has improved dramatically, notably in the area of usability. In a new report, Celent compares the range of solutions available to financial institutions of all sizes looking to purchase a new online small business banking solution or upgrade an existing one.

Celent examined the online cash management offerings of nine vendors (because most serve companies of all sizes with their offering, the term "cash management" is used). The vendors are: Corillian (Small Business Banking), Digital Insight (Business and Corporate Banking), Financial Fusion (Corporate Banking Solution), Fiserv BANKLINK (iLINK), Fiserv ITI (PremierEcorp), Fundtech (CASHplus), Metavante (Business Internet Banking), Open Solutions (e-Commerce Banker: Business Suite), ACI Worldwide (Enterprise Banker; formerly P&H), and S1 (Business Banking and Postilion Business Internet Banking). In the Breadth of features section, Celent decided to compare the vendors to that of a leading small business bank with a proprietary online platform: Wells Fargo (Business Online Banking).

"The small business online banking market is teeming with vendors vying for business across a broad range of financial institutions. A handful of vendors have emerged from the pack and have made their mark by offering a strong combination of advanced technology, strong features, usability and services to a large number of financial institutions," says Alenka Grealish, co-author of the report and managing director of the Banking group at Celent.

Banks have been grappling with whether to direct their small business customers to retail or corporate online banking. "There is a sweet spot that banks need to target, one that provides a tailored offering to small businesses," says Jacob Jegher, co-author of the report and senior analyst. "The focus on this small business sweet spot is going to drive IT spending on online small business banking solutions to US$257 million in 2007."

This 64-page report contains 19 figures and 26 tables. A table of contents is available online.

Members of Celent's Wholesale Banking research services can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.

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 subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary 3
Segmentation Drives Service Delivery 5
  Diversity in Small Businesses 5
  Financial Needs Vary Beyond the Checking Account 7
  Implications for Online Banking 9
Adoption Trends 11
  Best Practices 13
The Vendor Landscape 17
Celent's ABCD Vendor Analysis 20
  The Results 21
Advanced Technology 22
Breadth of Features and Usability 26
  Comparison with Wells Fargo 26
  Differentiating the Vendors 27
  Usability 28
  Features that Matter 29
  Customer Support: High Touch Tech 33
Customer Base 35
Depth of FI Services 37
Vendor Profiles 41
Conclusions 61
Objectivity and Methodology 63
 

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