Evaluating Banks

1. 1

   The characteristics of a financial institution most important to small-business owners in the conduct of their banking business are in order: convenient location, knows you and your business, reliable source of credit, speed of decision-making, easy access to loan officer, and offers a wide range of services.

2. 2

   The characteristics on which small-business owners’ principal banks are most likely to perform well are in order: convenient location, offers a wide range of services, reliable source of credit, knows the local market or community, speed of decision-making, and knows you and your business.

3. 3

   The largest shortfall between what small-business owners think important in a bank and level of their principal bank’s performance are: knows you and your business, speed of decision-making, and offers cheapest money available. The match between importance of bank characteristic and level of bank performance is similar on all other characteristics evaluated.

4. 4

   While a majority of owners believe the overall level of service quality at their principal bank is unchanged over the last three years, the percent of small-business owners providing favorable evaluations exceed those providing negative evaluations by a 33 percent to 11 percent margin. The most rapidly improving aspect of service quality is the growing number of bank services available. The only deteriorating aspect of service quality change is staff turnover.

5. 5

   Just over half (51%) wanted or needed to borrow for business purposes during the last three years. Eighty-five (85) percent of potential borrowers obtained the last loan they requested. Sixty-two (62) percent of potential borrowers obtained the loans they sought all the time; 28 percent did most of the time; 3 percent often did not get what they wanted; and, 8 percent (or 4% of all small employers) could never borrow the money they wanted.

6. 6

   Half (50%) enjoyed a single account manager over the last three years and another 30 had two. In contrast, at least 7 percent never had an account manager and another 13 percent experienced three or more.

7. 7

   Small-business owners are hesitatingly adapting to electronic banking. A majority (54%) say that technology at their principal bank has been increasingly helpful in conducting their banking business, while 11 percent believe technology is increasingly getting in the way. The remainder report technology is having no affect on them. However, only half do any electronic banking and only 7 percent have applied for credit on-line. Eighty-three (83) percent believe that banks are not forcing technology on them.

8. 8

   Sixty-two (62) percent of small employers bank within less than 10 minutes of their business location, an outcome consistent with the importance of knows you and your business and the slow adaptation of technology in conducting their banking business.

Volume 5, Issue 7, 2005
ISSN 1534-8326

Jonathan A. Scott
Temple University

William C. Dunkelberg
Temple University

• 4Over the last three years has your firm been able to SATISFY its borrowing needs:? Top 100
• 4aThe last time you applied for a business loan, did you get it? Top 100
• 1A(desirable bank characteristic) Knows you and your business.
• 1B(desirable bank characteristic) Provides helpful suggestions and advice.
• 1C(desirable bank characteristic) Offers the cheapest money available.
• 1D(desirable bank characteristic) Convenient location/hours.
• 1E(desirable bank characteristic) Reliable source of credit.
• 1F(desirable bank characteristic) Knows your industry.
• 1G(desirable bank characteristic) Speed of decision-making.
• 1H(desirable bank characteristic) Easy access to loan officer.
• 1I(desirable bank characteristic) Offers a wide range of services.
• 1J(desirable bank characteristic) Knows the local market or community.
• 1K(desirable bank characteristic) Social contact with loan officer.
• 1L(desirable bank characteristic) Has a customer-friendly Web site.
• 2A(bank performance) Knows you and your business.
• 2B(bank performance) Provides helpful suggestions and advice.
• 2C(bank performance) Offers the cheapest money available.
• 2D(bank performance) Convenient location/hours.
• 2E(bank performance) Reliable source of credit.
• 2F(bank performance) Knows your industry.
• 2G(bank performance) Speed of decision-making.
• 2H(bank performance) Easy access to loan officer.
• 2I(bank performance) Offers a wide range of services.
• 2J(bank performance) Knows the local market or community.
• 2K(bank performance) Social contact with loan officer.
• 2L(bank performance) Has a customer friendly Web site.
• 3A(change in) Accessibility to an account manager.
• 3B(change in) Quality of service.
• 3C(change in) Number of services offered.
• 3D(change in) Capability of staff or personnel.
• 3E(change in) Staff turnover.
• 3F(change in) Lending terms.
• 3G(change in) Ease of doing your banking business.
• 5How many account managers have you had in the last three years?
• 6What is the approximate time in minutes that it usually takes to go from your place of business to your current primary financial institution?
• 7Over the last three years at your primary financial institution or bank, have you found technology ________ in conducting your banking business?
• 8Is your principal financial institution forcing you to use more technology in your banking relationship than you would like?
• 9Does your firm do any banking over the Internet?
• 9aDo you check on balances and/or deposits on-line?
• 9bHave you applied for credit on-line?
• 9cDo you make payroll deposits on-line?
• 9dDo you transfer money from one account to another on-line?