The first 30 days – how banks will win small business customers for a lifetime

Right now there’s a conversation going on in the banking industry. Banks are saying that the first 30 days after a customer opens an account is critical for ensuring long term engagement. It’s a high stakes time.

The question is how to make these first 30 days compelling, so their customers will stay for the long haul, regardless of the rates offered by the competition.

So many banks are taking a step back – examining hyper-personalisation, AI and seamless onboarding. A number are also asking how their offerings can become less associated with fulfilling your financial admin, and more associated with fulfilling your dreams.

The good news is that banks are largely on the front foot here. Many have a long history of having their customers’ backs as they chase the livelihoods, homes and businesses they’ve always wanted. It’s a trend that’s been increasingly pronounced in the last fifteen years. And it’s just about to take a new turn.

The first 30 days are soon going to have a lot to do with supporting customers to launch a business – and taking them to their first transaction online.

Banks could support as many people to launch a business as buy a home

There’s a narrative shift that’s taken place in many banks over the past fifteen years, with increasing emphasis on supporting everyday individuals and grassroots commerce.

You could say the completion of this shift was marked in SME banking history when Antonio Horta-Osorio, Lloyds chief executive, said, “We don’t do investment banking, we sold asset management, we sold international private banking. What we do is support families and businesses and communities in this country.”

The kind of support people want from banks is changing however. In the past this has largely meant being there for people saving for a home, or preparing for retirement. More and more though, it means being there for people launching their own business.

In the U.S. a study by Samsung polled 1,000 students aged 16-25 and found that 50% expressed the desire to become an entrepreneur or start their own business. That’s stark compared to the findings of a McKinsey study, which found that 59% of Gen Z do not own or expect to own a home.

The UK shows a similar contrast. According to Zoopla, less than a quarter of people under the age of 40 own a home. And for the rest, 42% don’t expect to own a home for at least the next 10 years. Aspiration is still thriving however, according to research by AAT, it just looks different. 64% of Gen Z Brits have either started their own business or considered doing so.

So you could say that for the new generation, the good life doesn’t always look like a property deed and a garden out the back. For many, the next stage is not home ownership, but business ownership. And banks will want to be there for it.

Banks are already helping small businesses to launch and stay in the game

To their credit, banks have been championing small businesses for a long time.

Santander, named by Euromoney as the best bank for SMEs in 2023, offers a lot of support they classify as “beyond banking”. They accept card payments through a partnership with Elavon. They support businesses with energy and broadband through Bionic, and they also offer business coaching through ActionCOACH.

Similarly, DBS was recognised for investing in new technologies to help SMEs – and primarily micro and small enterprises – manage credit risk. With data analytics tools and AI, they were able to identify non-performing SME loans before they became hazardous – and they averted most of these borrowers from risk.

Then as we’re seeing, many banks are beginning to offer tools and software to get businesses up and running, and transacting. The Bank of Scotland has its own accounting software. Metrobank has partnerships with Xero and Acceptcards. HSBC has a mobile business banking app that comes with a number of discounts for everything from business broadband and insurance to payment software.

There’s an opportunity for banks to go a step further, however. 

When we attended the 2024 Finovate conference, a number of industry leaders were voicing the need to bring all of this support within a single branded experience – not dissimilar to the kind offered by a super app. This is exactly the kind of experience that McKinsey advocated for in their new report on how banks can serve small business clients.

We’re also noticing the first forays into offering the next phase of the business experience: not just helping a new business owner with their behind-the-scenes accounts and invoicing, but helping them to get started selling and transacting online.

You can see this with Ecobank, the leading pan-African banking group. Ecobank is piloting an ecommerce marketplace in Nigeria called MyMall – that’s alongside their POS tech, cash management tools, and supply chain management tools for small businesses. It’s perhaps not surprising that Ecobank was named by Euromoney as the African bank of the year for SMEs in 2023.

From idea to transaction

All in all, there’s plenty of evidence that suggests this is the future for a winning first 30 days with a customer.

1. With the increase in entrepreneurial ambition, a lifelong customer experience is going to involve supporting people to launch a business.
2. For a bank to build trust, it should be an entirely branded experience.
3. For a bank’s experience to be complete, it should enable a business to begin transacting online.

So many banks have already invested in this space for the future. From third party software tools to coaching and advice, you can already see what it could look like.

Many banks are just shy of a fully branded business launch experience. Banks offer so many benefits with their business bank accounts, but branding is what will make people see this pot of perks as a source of trusted support.

Similarly, a number of banks are only just shy of setting people up to transact online. The payment gateways are often there. The accounting software too. For many, all that’s missing is a website and e-commerce store.

The solution to both of these could be to adopt an open ecosystem approach, working with a number of white label partners. For some banks it would mean a great change. But it’ll also mean an unrivalled first 30 days of engagement – and a lifetime of customer loyalty.

For more insights into what small businesses are looking for, see why banks will be the next base camp for selling online or three ways banks can help e-commerce entrepreneurs right now.