Information is Power in Banking Relationship

Small business owners need to start using the leverage they have with banks. And by leverage, I don’t mean borrowing more money. Rather, small businesses have a growing market power that they need to use to their advantage when negotiating with their existing and with prospective new banks.
For the first time, JD Power has conducted a survey on small business banking satisfaction, which was measured across nine factors: relationship with primary contact; problem resolution; depository services; statements; fees; merchant services; cash management; credit services; and online services. PNC Bank, Wachovia, and SunTrust were the top three in their ranking. Interestingly, American Express, which has been advertising aggressively to small business, also ranked fairly well. The biggest banks tended to rate the lowest with small businesses. Impersonal service, high fees and frequent mergers and changes are the likely reasons.
Although they will not show up on all of these rankings, many communities are seeing growth in start-up niche banks that focus primarily on small business clients. These banks can offer a real alternative to the large regional and national banks for many business owners.
Small business is big business for banks these days, providing a growing source of revenues (for many banks more than their retail accounts). Small businesses need to use information to make better decisions on their banking relationships. They should no longer feel intimidated in their relationship with a bank, passively putting up with poor service and high fees. This new JD Power survey, the SBA’s report on small business lending, and talking with other small business owners can provide insight into what you can and should expect from your bank.
If you are not satisfied with your bank, make sure to let them know. It also may be time to shop around. As we saw in the recent NFIB survey on small business banking, service and credit are the top reasons small businesses change banks. And while changing banks is not an easy process, your new bank can help make the process run smoothly with a little planning.