Nearly Half of US SMEs Looking to Switch Banks
Almost half of small and middle market companies in the US are actively seeking a new bank or would consider changing banks if presented with a compelling offer, according to the results of the latest Greenwich Market Pulse survey of 670 companies.
At the start of 2007, less than one-third of the companies participating in the Greenwich Market Pulse said they were actively seeking a new bank or considering a switch. At the end of 2008, nearly half of the 260 small businesses and 40% of the 410 middle-market companies participating in the survey were looking for or open to finding a new bank.
Among middle market companies that changed banks in the past 12 months, a quarter say their original banks could not provide required services and more than 20% say their banks failed to give loans or financing when needed. Almost a quarter of small businesses that switched banks in the past year say their previous bank could have retained their business by improving communication and response or simply by “appreciating our business and treating us better.”
“The risk for banks is that many creditworthy companies are feeling like they’ve been mistreated by their banks, and they are voting with their feet,” says Greenwich Associates consultant Steve Busby. “Companies that are on solid ground see the credit reductions, more stringent terms and higher fees as punishment they are being forced to take for bad decisions made by the banks or less responsible borrowers.”