Bank's Reputation More Important than Price for US SMEs
Concerns about the health and reliability of US banks have become such a pressing issue for small and mid-size enterprises (SMEs) that the strength and reputation of individual bank brands are becoming as important as price and product quality when these companies choose a new bank.
More than half of small businesses and 40% of middle market companies say they have lost trust in their banks, according to the results of Greenwich Associates’ Market Pulse. More than 85% of executives at small businesses and middle market companies agree that the current situation represents nothing less than a crisis of confidence in the nation’s banking sector.
With confidence breaking down, two-thirds of small business and middle market executives say they have begun choosing banks based on their perceptions of banks’ reputations and overall brand strength, as opposed to product quality or price. Fewer than 20% of decision makers at SMEs say they currently look at specific products before brand when choosing a financial services provider, and 80% say directly that the strength of a bank’s brand is equally or more important than its product offerings.
“These findings demonstrate just how severe the breakdown in trust has become in commercial banking,” said Greenwich Associates consultant Steve Busby. “Only one-third of companies now say that price is the most important factor when picking a bank, and only 20% of companies say they would choose a bank with a weak or damaged brand – even if it had superior products.”
Virtually all US banks have seen their reputations suffer among small businesses and middle market companies. Greenwich Market Pulse research reveals only two exceptions: Wells Fargo and BB&T have improved their reputations according to the majority of companies over the past year. As the accompanying charts illustrate, Well Fargo and BB&T were the only US banks to garner net positive ratings when small and middle market corporations were asked to assess whether the banks’ reputations had been damaged or improved over the past year.