Some of the country’s largest banks are targeting small businesses, including Bank of America, FleetBoston, and Wells Fargo.
Bank of America sees small businesses as a huge potential customer base. For instance, it was the top SBA lender last year, making 9,406 SBA loans. In an article in American Banker Magazine, Bank of America says it “targets small-business owners because they bring both personal and commercial business to the bank.”
More and more financial institutions are “chasing small businesses with fee-generating services, dangling special loan programs and deposit accounts. Many of these banks believe they can cross-sell small-business owners with personal financial planning, employee benefits products, and extra commercial services such as payroll or cash management.”
Small businesses are underserved in American banks today and deserve more attention. Although they typically represent about 10% of a retail bank’s customer base, they are extremely profitable customers, with profitability four to seven times that of consumers, on average. For some banks, this valuable segment contributes up to 60% of their retail profits.
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