recent press releases
- 65% of small businesses to find finance online in the next five years
- Only 1 in 3 expect to use bank branch in next five years
LONDON, JULY 2004 - Online banking by small businesses will surpass banking in branches in five years time, according to a survey by Xbridge, the UK's leading financial intermediary for small businesses.
In a recent poll of small businesses1 already using the internet, 65% said that in five years time they expect to find most of their financial services and funding solutions for their businesses using the internet. Just over 1 in 3 (34%) said they still expected to be using their bank branch in the next five years.
The results also revealed that small businesses had limited access to alternative channels for financial services five years ago. Over two thirds (67%) of small businesses had to use their bank branch and the internet was used by only a paltry 5%. Since that time the playing field has levelled. Currently small businesses are using both channels at about the same level, with 49% using their bank branch, and 45% using the internet.
Brad Liebmann, Managing Director of Xbridge said: "The small businesses surveyed are currently using the internet nine times more than they were five years ago, and at the same time their usage of the bank branch network has dropped by a third. This trend indicates that in five years time small businesses usage of the internet could surpass bank branch activity for the first time."
Xbridge's research illustrates that banks will have to respond to the change in demand from small businesses to treat the online channel as a primary means of servicing the needs of small businesses as well as driving new customer acquisition.
Brad Liebmann, comments: "What we're seeing in action here is a new generation of web-savvy entrepreneurs and small business owners choosing to find financial services for their business online the same way they have found personal financial services."
The research also revealed that some small business customers are more loyal to their branches than others. Royal Bank of Scotland (RBS) small business customers use of the internet is currently the highest (56%), rising to a massive 72% in the next five years. Whilst around 50% of RBS customers currently use their branch only 22% still plan to do so in the next five years. Lloyds small business customers also exhibit this diminishing reliance on their branches with 44% fewer expecting to use their branch in five years.
Conversely, over 56% of NatWest customers have indicated that they will still use their bank branch in five years time. This is over one-third more than any of the other banks surveyed in terms of loyalty to the bank branch.
Barclays Bank customers appear most optimistic about moving to the internet, with almost three quarters (73%) expecting to find finance online in the next five years, a massive increase from 41% today.
Brad Liebmann, concludes: "The research reveals that small businesses are increasingly adopting the internet and the convenience that it affords them. Few banks currently offer their customers a quality online experience. Those who continue to ignore this growing segment of small business customers will lose market share.