Author Archives: mronan

More banks launch initiatives for National Small Business Week

Earlier this month, we posted a blog on small business initiatives from Citi, TD Bank and Wells Fargo, which were introduced in advance of National Small Business Week. As National Small Business Week is taking place this week, other leading banks have also introduced new small business initiatives.

  • Chase introduced a number of initiatives, including incentives of up to $1,000 for new small business checking customers, as well as Instant Storefront from Chase, a solution that enables small businesses sell products online.
  • Bank of America launched a suite of small business charge cards (see our blog on this launch).  In addition, the bank has partnered with SCORE to develop a five-part series of three-hour workshops for small businesses, entitled “Simple Steps for Starting Your Business.”
  • Capital One partnered with Better Business Bureau to introduce Managing Credit – Made Simpler, a set of resources to help small businesses to manage credit.
  • American Express OPEN introduced AdManager, a tool to help small businesses manage online advertising campaigns

It is notable that the number of small business campaigns is much larger this year than it was for National Small Business Week in 2010, reflecting the improved economy over the past year, as well as banks’ renewed interest in the small business market.

Bank of America launches suite of small business charge cards

Earlier this week, Bank of America introduced of a suite of three small business charge cards. Up to now, Bank of America has only issued small business credit cards.

This new suite will compete in the small business charge card space with leader American Express, as well as Chase, which now issues an Ink Bold charge card as part of its Ink small business card suite.

This new charge card suite will also compete with small business credit cards.  Leading small business credit card issuers retrenched significantly following the financial crisis in the second half of 2008.  Since then, some leading issuers have returned to the market, but small business cards are now marketed less as sources of working capital, and more as payment vehicles.  And there is significant spending growth potential for small business credit and charge cards, as card’s share of overall small business spending is much lower than card’s share of consumer spending.

Marketing such cards also enables issuers to maintain relationships with small business customers, who can then be cross-sold additional products and services, including lending products as confidence returns to the market.

Leading U.S. banks maintain branch numbers

The emergence of electronic channels in the financial sector has led some commentators to predict the imminent demise of the branch channel. In a previous blog, EMI disputed this prediction, arguing that banks would maintain a significant physical presence, although there would be changes in branch activities.

U.S. banks’ ongoing commitment to their branch networks is seen in the latest quarterly financials.  Data is available for 8 of the top 10 branch networks in the U.S. (the exceptions are Wells Fargo and TD Bank).

  • These eight banks combined operated 23,152 branches in 1Q11, a decline of just 27 from 1Q10, and 7 from 4Q10.
  • Two of these banks (Chase and U.S. Bank) grew their branch networks in the most recent quarter.  And in April, Chase reported that it would open 100 branches in California and 37 branches in Florida in 2011.
  • Bank of America registered the largest decline, with a decline of 51 branches between 4Q10 and 1Q11.  Even after this decrease, it has more than 5,800 branches.

So, banks appeared committed to their branch networks for the foreseeable future.  Electronic channels are now very effective in handling everyday service transactions, and are increasingly important sales channels.  However, branches are still required for more complex and sensitive sales and service transactions, as well as for providing advice.  However, banks need to continue to invest in their branches (in both physical infrastructure and personnel) in order to optimize effectiveness.