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Financial Services and Small Businesses - US - October 2015

Published By :

Mintel

Published Date : Oct 2015

Category :

Banking

No. of Pages : N/A

The small business segment is changing rapidly, as an increasing percentage of small businesses are owned by women and minorities.

Table of Content

Overview

What you need to know
Definition

Executive Summary

The issues
Mobile banking still not heavily used
Figure 1: Use of mobile and online banking, July 2015
Disruption in the lending arena
Figure 2: Funding sources, July 2015
The opportunities
Increase attractiveness of mobile banking
Figure 3: Essential mobile banking services, by annual revenue, July 2015
Alternative lending
Figure 4: Spending and loan plans, by generation, July 2015
Women and business banking
Figure 5: Business account ownership, by gender, July 2014
Figure 6: Future source of financing, by gender and age, July 2014
What it means

The Market – What You Need to Know

Small business is back
Fastest growing segment of small business owners: minority women
Minorities are buying more small businesses
A strengthening economy is helping

Market Size

Number of small businesses
Figure 7: Number of firms with fewer than 100 employees, 2008-12
Women – especially minority women – are greater percentage of self-employed
Figure 8: Percent of self-employed women, by race and Hispanic origin, 1993 vs. 2012

Market Segmentation

Small business buyers are increasingly diverse
Figure 9: Percentage of small business buyers, by race and Hispanic origin

Market Factors

Stronger economy
Unemployment
Figure 10: US unemployment rate, Feb. 2008-Aug. 2015
Minimum wage legislation
The Affordable Care Act
Changing demographics

Key Players – What You Need to Know

Small business owners are satisfied with their banks
Minorities and women are at a disadvantage

What’s Working?

Small business customers increasingly satisfied with their bank
Alternative lending for businesses

What’s Struggling?

Mobile banking still not used
Minority and women small business owners more often denied credit

What’s Next?

Increase in and smarter use of social media
Microbusiness
Alternative lenders will fuel the fire
Kabbage
OnDeck
LendingClub

The Consumer – What You Need to Know

Most small businesses have only one owner
Using incentives to capture business
Mobile banking can be a source of revenue
Alternative lenders have greatest growth potential
Satisfaction with business banking relationships is high

Characteristics of Small Businesses

Most small businesses have only one owner
Figure 11: Business ownership, by gender, July 2015
Most operate out of homes, not offices
Figure 12: Location of small business, July 2015
Women are more likely to be sole proprietors
Figure 13: Number of paid employees, July 2015
Age of business and revenues
Figure 14: Small business revenue, by age of business, July 2015
Revenues of women-owned businesses are lower
Figure 15: Small business revenue, by gender, July 2015
Mix of small businesses
Figure 16: Most popular small business industries, July 2015
Age of business
Figure 17: Age of business, July 2015
Women are starting more businesses than are men
Figure 18: Age of business, by gender and age, July 2015

Business Banking Services Used

What kind of accounts do they have?
Figure 19: Wells Fargo business checking incentive email, 2015
Figure 20: Accounts owned, by gender, July 2015
Larger small businesses are more likely to have business accounts
Figure 21: Accounts owned, by number of employees and annual revenue, July 2015

Factors in Choosing a Bank

How did they choose their business bank?
Figure 22: Factors in choosing business bank, July 2015
Most important features for merchant services
Figure 23: Factors in choosing merchant services provider, July 2015

Mobile/Online Business Banking Usage

Online banking is much more popular than mobile banking
Figure 24: Usage of mobile and online banking, by gender, July 2015
Both are more popular among younger people, younger businesses
Figure 25: Usage of mobile and online banking, by age of business, age of business owner, July 2015
Even business owners who use electronic banking don’t use it much
Figure 26: Banking behavior, July 2015
Value of mobile banking
Figure 27: Value of mobile banking services, by annual revenue, July 2015

Essential Banking Services

Different demands of mobile and online
Figure 28: Essential banking services, mobile vs. online banking, July 2015

Reasons for Not Using Online or Mobile Banking

Figure 29: Reasons for not using electronic banking, by channel, July 2015

Business Banking Behavior

Getting businesses to switch banks
Figure 30: Reasons would switch banks, by number of employees, annual revenue, July 2015
Opportunities for alternative lenders
Businesses with higher revenue
Figure 31: Spending and financing plans, by annual revenue, July 2015
New businesses
Figure 32: Spending and financing plans, by age of business, July 2015
Few small businesses utilize mobile payment systems
Figure 33: Use of mobile payment systems, by number of employees, annual revenue, July 2015
But most new small businesses believe they are the future
Figure 34: Importance of mobile payments to business future, by age of business, gender, July 2015

Business Funding Sources

Funding sources are changing
Figure 35: Past and future funding sources, July 2015
Figure 36: Centris Federal Credit Union Direct mail ad, 2015
Credit unions should reach out to women
Figure 37: Plans for future financing, by gender, July 2015

Attitudes toward Business Banking

Importance of a business banker
Figure 38: Importance of bank branches and business bankers, by annual revenue, July 2015
Majority is satisfied with their relationship with their bank
Figure 39: Satisfaction with business bank, by gender, annual revenue, July 2015
Attitudes toward loans
Figure 40: Attitude toward getting a loan, by annual revenue, age of business, July 2015

Snapshot of Millennial-owned Small Businesses

Characteristics
Business ownership
Figure 41: Small business ownership, by generation, July 2015
Business location
Figure 42: Location of business, by generation, July 2015
Number of paid employees
Figure 43: Number of paid employees, by generation, July 2015
Annual revenues
Figure 44: Annual revenues, by generation, July 2015
Company industry
Figure 45: Company industry, by generation, July 2015
Age of business
Figure 46: Age of business, by generation, July 2015
What small businesses want from their banks
Type of account owned
Figure 47: Type of business accounts owned, by generation, July 2015
Important features in a business bank
Figure 48: Most important features in a business bank, by generation, July 2015
Mobile vs online banking
Figure 49: Mobile and/or online banking usage, by generation, July 2015
Essential mobile and online banking services
Figure 50: Essential mobile banking services, by generation, July 2015
Figure 51: Essential online banking services, by generation, July 2015
Attitudes toward switching and lending
Figure 52: Attitudes toward switching and lending, by generation, July 2015
Online banking usage
Figure 53: Online banking usage, by generation, July 2015
Mobile banking usage
Figure 54: Mobile banking usage, by generation, July 2015
Use of online-only banks
Figure 55: Use of online only banks, by generation, July 2015
Figure 56: Capital One 360 business savings account email, 2015
Sources of funding
Figure 57: Most popular sources of funding, by generation, July 2015
Figure 58: Planned future sources of funding, by generation, July 2015
Attitudes toward and satisfaction of business banking
Attitudes toward business banking
Figure 59: Attitudes toward business banking, by generation, July 2015
Figure 60: Attitudes toward business banking, by generation, July 2015
Importance of mobile banking
Figure 61: Importance of mobile banking, by generation, July 2015
Satisfaction with business bank
Figure 62: Satisfaction with business bank, by generation, July 2015

Appendix – Data Sources and Abbreviations

Data sources
Sales data
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations

Appendix – The Consumer

Figure 63: Percentage of sole proprietorships owned by men vs. women, Feb. 2007-Mar. 2015

List of Table

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