Small Business Financial Platforms: Overcoming Obstacles to Adoption and Penetration

December 27, 2001



Boston, MA, USA December 27, 2001


This report reflects on the current state of online financial platforms for small businesses and identifies key factors blocking their usage.

In a new report entitled, " ," Celent explores the factors blocking small business usage of online financial platforms.  In addition, the report analyzes the initial strategies of brick-and-mortar financial institutions, Internet-only banks, and online portals and provides an update on how those players have fared given the lower-than-anticipated adoption rates. 

“We estimate that US$3.0 billion has been spent on building and marketing online financial platforms, yet to date only one million, or 4%, of small businesses use these online platforms,” comments Pamela Brewster, author of the report. “Simply offering a platform is not enough. A concerted effort must be made to reach out to small business customers, understand their needs and concerns, and change the platform accordingly. Otherwise, adoption rates will remain low.”

Celent offers recommendations for spurring online utilization including: 1) building more reliable platforms; 2) demonstrating the value of the platform to small businesses, and 3) providing channel integration. The report also examines whether a provider can achieve a return on investment (ROI) on these platforms. Revenue and cost factors are considered along with potential customer penetration rates and usage of online financial services including e-401(k), online bill payment, payroll, and merchant services.

"In general, if the platform is used primarily to obtain information and pay bills, then ROI will be minimal at best," adds Pamela Brewster.  "However, if the platform spurs transaction activity, then it may become a profit center."

The report concludes with a look at the evolutionary track Celent believes online financial platforms will follow during the next 18-24 months.

A Table of Contents is available online.



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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].

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Table of Contents


  Boston, MA, USA  December 27, 2001 Return to report Abstract
  Platform Providers 7
  Technology Investment 9
  Risk Aversion 11
  Inertia 11
  Myth of Self-Sufficiency 11
  Service Problems 12
  Discomfort 13
  Distrust 13
  Market Consequences 14
  Revenue Drivers 20
  Cost Factors 23
  Conclusions 24

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