NEW YORK (TheStreet) - Approximately one-third of small businesses have never used mobile banking services, yet many say they do have a need for it, leaving wide opportunity for banks to boost awareness and types of mobile services they provide to small firms, according to a joint report by RateWatch, a premier banking data and analytics service owned by TheStreet (TST) and Simon-Kucher & Partners.
Roughly 45% of small businesses that have never used mobile banking said they do have a need for the services or that the services would be nice to have, according to the report, "Monetizing Mobile Banking for Small Business Customers." The report looks at how small businesses currently use mobile banking, as well as what features they would pay for and how they want to pay for them.
Approximately 34% of respondents said they use mobile banking at least once a week; 31% said they have never used mobile banking, the survey found.
Most small businesses would prefer to pay a monthly fee for unlimited mobile transactions. The median would prefer to pay a fee ranging from $1 to $10, for informational services, transactional services and advanced interactive services, the survey found.
The top three overall most important mobile banking features for small firms are: accessing account information such as balances, recent transactions and statements; receiving alerts notifying them of fraudulent activities, low balance, reached overdraft limits and payment due dates; and monitoring fraudulent activities, the report said.
Small businesses are willing to pay a median of $5 a month for informational mobile services such as accessing account information, receiving alerts and accessing tools to manage their finances. They're also willing to pay a median of $5 a month for transactional services, such as transferring money, adding money to prepaid cards or receiving payments from customers via ACH, wire or credit card. Small firms are most willing to pay for "advanced interactive" services such as negotiating credit increases to support short-term borrowing needs and requesting payment flexibility for loans, mortgages or credit cards.
The report suggests a tiered system of payment that will appeal to all levels of mobile-banking savvy small businesses.
"There is a huge potential for financial institutions to improve their interaction with small businesses through the use of mobile banking. However, for mobile banking to cement its place in the future banking landscape for small businesses, there needs to be widespread take up, rather than sporadic take up by only the most tech savvy," the report said. "For pioneer mobile banking solutions to gain broad acceptance, they need to be attractive enough from value and price perspectives to entice those who have low interest and low willingness-to-pay for mobile banking services."
The report is based on a total of 147 responses completed by U.S. small businesses with less than $5 million in annual revenue (41.1% had revenues less than $250,000) and representing more than 20 major industries. The majority of small companies had been in business for more than 10 years, and more than 30% did their banking with institutions other than 20 of the largest U.S. banks. The responses were collected in the first quarter of 2014.
The survey asked respondents to best describe their mobile banking activities at their primary financial institution: 30.8%, the largest group, said that "my financial institution offers mobile banking, but I have never used it;" 16.1% said they use mobile banking one to two times a week; 12% said they haven't used mobile banking for more than six months; 11.7% said they use mobile banking monthly, but less than once a week; 9.6% said they used mobile banking at least once in the last six months; 9.5% said they use mobile banking six times a week or more and 8.3% said they use mobile banking three to five times a week.
In comparison, approximately 28.2%, representing the largest group of respondents, said that they used online banking one to two times per week. Approximately 27%, the next largest group, said they used online banking six or more times a week; 19.7% said they use online banking three to five times a week; 8.1% use online banking monthly but less than once a week. Just 4.4% said they did not have an online banking account.
--Written by Laurie Kulikowski in New York.