With the ending of SBA Payment Protection Program (PPP) loans, banks’ small business loan portfolios declined significantly in the second half of 2021. However, in line with the economic recovery, the outlook for small businesses appears positive entering 2022 (pandemic permitting). With this in mind, we observed the following trends in small business marketing, thought leadership and product development during 4Q21 as both traditional and challenger banks jockeyed for position in the small business market.
Financial providers continued to market to small businesses in a variety of ways, such as:
Developing campaigns and messaging around small business events, such as Women’s Small Business Month (in October) and Small Business Saturday (in November).
Financial providers are pursuing a multi-faceted approach to small business thought leadership, including:
Coverage of a broad range of topics of interest to small business owners
Increase in content targeted at different business owner segments and industries
Multiple content formats, led by articles and blogs, but providers are also increasingly using other content types, such as newsletters, videos, infographics and podcast series. (Bank of the West launched the Means & Matters podcast focused on women business owners. Cadence Bank introduced Good Companies, its first podcast.)
Continued focus on portals to organize content. Regions extended its Next Step sub-brand with the launch of the Next Step for Business portal.
With a significant majority of small businesses embracing digital channels, banks are expanding digital functionality and using these channels for both service and sales.
KeyBank reported a 50% rise in digitally active small business clients post-pandemic.
In a November 2021 presentation, U.S. Bank reported that the digital channel’s share of small business sales rose 2.5 times over the previous year.
Huntington Bank reported that digital channels accounted for 16% of new business deposit accounts, up from 12% in 2Q21 (and 0% in 3Q20).
Traditional banks are facing competition from a diverse array of challengers that are launching new products, aggressive pricing and a focus on the digital experience.
American Express sought to take advantage of its leadership small business payments by launching Kabbage Funding and the Amex Business Checking app.
Intuit launched the Money by QuickBooks mobile app and QuickBooks Checking.
Leading issuers launched new small business cards to capture a share of the expected strong growth in small business card spending in 2022.
In 2022, we expect that most of these trends will continue as new entrants look to identify and exploit market gaps, and incumbents focus on protecting and growing their small business customer bases by refining their positioning, products, offers and customer experience.
Numerous surveys continue to highlight financial literacy gaps among U.S. adults and children, illustrating the ongoing need for financial education programs (according to a Step survey, 97% of teens believe that financial literacy is important). Many financial firms and their partners have been at the forefront in developing and distributing innovative financial education programs. The following are noteworthy financial education trends in the 3rd quarter of 2021.
Build engagement with younger segments through financial education programs and content. Firms are looking at a wide range of channels to reach younger demographics:
HSBC created a new world in Minecraft – Fintropolis – designed to improve financial literacy.
Bank of America launched a 7-part series on YouTube that aims to share financial know-how with both parents and students.
Develop financial education partnerships with associations and advocacy groups.
OneMain Financial partnered with EverFi to launch the Money LaunchPad financial literacy program for students in grades 9 to 12.
BancorpSouth committed $1.5 million to Operation HOPE for financial literacy programs and announced six additional HOPE Inside locations.
Target specific consumer segments with financial education programs and thought leadership tailored to their unique needs, including:
LGBTQ: Capital One published an article, “The Debt Free Guys: Financial Obstacles Facing LGBTQ+ People”, and Ally published an article on “Financial Considerations for LGBTQ+ Couples.”
Couples: Ally Bank launched a marketing campaign targeting couples’ fears over the “Money Talk”, and Morgan Stanley listed “6 Money Questions to Ask Your Partner Before You Commit.”
Widows and Widowers: MassMutual published “A financial checklist for widows and widowers.”
Brand financial education programs to bring together various financial education initiatives as well as raise consumer awareness and engagement. Recent examples:
Regions introduced the Next Step podcast, the latest resources from the bank’s Next Step financial education program.
Capital One launched the Money & Life program, which builds on its former Money Coaching program.
Position financial education as part of broader ESG and CSR initiatives. Financial education efforts are now more prominently featured in financial firms’ annual ESG and corporate social responsibility (CSR) reports.
Established and challenger banks responded to key changes in the small business landscape (ongoing economic recovery and the ending of PPP loans) in the third quarter of 2021 with new business banking solutions and thought leadership.
Banks published surveys that gauged small business owner optimism and addressed current hot topics, such as inflation (PNC), supply chain disruptions (Umpqua Bank), access to funding (Goldman Sachs) and relationship with their financial service provider (Kabbage).
Leading small business credit card issuers launched new cards with high earn rates to capture a greater share of the increased card spend following the pandemic. Noteworthy examples include Capital One Spark Cash Plus (2% cash back on all purchases) and U.S. Bank Triple Cash Rewards Visa Business (3% cash back on four core categories). In addition, American Express launched a business-to-business marketing campaign (“Built for Business”) promoting its business cards.
Financial firms continued to generate small business content, with new podcast services added to the suite of content options during the quarter (e.g., Regions Next Step for Business and Comerica’s Small Business Summer Series on LinkedIn).
Banks rolled out initiatives for historically-underserved business segments, including black-owned business (Ally’s $30 million commitment to help grow black-owned businesses) and women-owned businesses (BMO Harris’s Women in Business Credit Program).