B2B Payments

How Payments Power Small Businesses' Mobile Banking Adoption

Small businesses (SMBs) seem to have crossed a threshold over the last few years. In 2017, researchers at RateWatch found that small businesses were skeptical of mobile banking services, with more than one-third of SMB owners having never used a mobile banking solution, even when their financial service providers offered one.

Flash forward to 2020, and the mobile small business banking landscape appears to have made some progress.

J.D. Power researchers published their 2019 U.S. Small Business Banking Satisfaction Study in October, which found an 8 percent year-over-year increase in the portion of SMBs using their banks' mobile banking apps, rising to 61 percent (compared to 53 percent in 2018). It's a significant growth trajectory, though one that some experts may have expected to occur sooner.

"The concept of being able to access your account from anywhere at any time is relatively new for small business owners, even though it is already mainstream for consumers," said Heather Ellison, head of retail banking for CIT's southern California banking division OneWest Bank, to PYMNTS.

An Open Banking Opportunity

The surge in FinTech competition and collaboration in the small business banking arena, however, has driven demand among small business owners to access the same kind of automated, digital solutions that they have available in their personal lives. At the same time, those entrepreneurs are seeking tools that are more sophisticated than traditional, consumer-focused mobile banking solutions.

Ellison pointed to SMBs' need for consolidated data across a range of financial and operational processes, with the mobile device an optimal platform to offer a holistic view of more than their bank account balances.

"Mobile banking provides a valuable convenience for a central responsibility: managing money," she said, pointing to mobile check deposits, fund transfers and financing applications as key functions of OneWest's new small business mobile banking app, announced late last month.

The aggregation of multiple finance processes — from applying for equipment financing to managing cash flow — presents the mobile device as a platform that may drive the adoption of Open Banking frameworks in the small business financial services market, as more service providers acknowledge the opportunity to consolidate information beyond the data a bank holds.

The Commonwealth Bank of Australia recently reflected this trend with its own debut of a small business app, dubbed Vonto. Reports in Mozo last week noted that the solution isn't only designed to support small business mobile banking, but embrace Open Banking to aggregate data from a range of SMBs' back-office apps. The solution then analyzes that information, and presents top key performance indicators — including cash flow and social media engagement — on a daily basis.

In a statement, Vonto Managing Director Elliot Cousins pointed to the time crunch that small businesses face, with mobile devices offering a significant opportunity for a more efficient way to manage the many jobs small business owners must handle by becoming a landing pad for data once siloed across various functions and apps. Ellison offered a similar sentiment.

"Small business owners wear many hats, so they are understandably short on time," she said. "With small business owners already juggling so much, mobile banking has introduced a much-needed flexible banking solution."

Embracing Mobile Payments

Pointing to OneWest's own research, Ellison highlighted small businesses' digitization initiatives, with the adoption of cloud computing systems, digital customer relationship management (CRM) solutions, and data privacy and cybersecurity tools among SMBs' biggest priorities for the year ahead. Furthermore, she noted, hiring tech-savvy talent is also a critical focus for today's entrepreneurs.

Small firms' embrace of mobile banking platforms is indeed a reflection of their broader digitization initiatives. However, mobile banking solutions can also support digitization in other areas of the enterprise, with electronic payments developing a deeper relationship with SMBs' mobile banking adoption.

"We're seeing small business owners use Bill Pay more often, especially for recurring payments like utility bills and rent," Ellison said of small businesses' growing comfort with using mobile payment technologies. "The opportunity to set it and forget it saves time, and eliminates headaches each month."

This comfort extends to small businesses accepting payments via their mobile devices, with Ellison offering the example of a plumber being able to deposit a check payment from a customer right at a job site. This is yet another opportunity for data consolidation to offer additional value for small business owners, she said, with the consolidation of both payment inflows and outflows on a single mobile device promoting a more holistic view of financial standings.

With a growing gig economy driving even more demand for mobile-friendly financial management tools, and with small businesses overall making progress in their digital transformations, mobile banking apps are likely to find more opportunities to promote ePayments adoption, empower small businesses with real-time data analytics and drive a more integrated ecosystem of cash flow management.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.