09.12.01 Business Owner Relationships

Study Reveals Thrifts and Credit Unions Acquiring Business Owner Relationships at the Expense of Mid-Size Banks.

Non-banks capture twice as many business owners' personal account relationships as they have business account relationships.

CALABASAS, CALIFORNIA (September 12, 2001) - A new study by Informa Research Services, Inc., of 1,100 business owners (annual revenue between $50,000 and $9,999,999) indicates nearly one-fifth (18%) of small business owners have their personal deposit account relationships with non-banks, including credit unions, thrifts and brokerage firms. This percentage (18%) represents more than twice as many personal deposit account relationships with business owners as these same institutions have business account relationships (8%).

"Thrifts and credit unions have always excelled in the area of personalized sales and service. It is really not surprising that many business owners turn to these institutions for their household banking needs, in spite of the fact that many of these same owners use a commercial bank for their business banking," said Mike Marselli, the manager of the study. "What is so surprising about these results is that nearly three-fourths (72%) of all small business owners use the same lead provider for both their business and their personal banking needs. This trend represents a great opportunity for non-banks to capture additional business banking relationships. They must cross-sell business services to their business owner customers that maintain only a personal banking relationship with the institution. By identifying these clients, they find a built-in market to launch their business services."

An interesting finding of the study is that most of the owner relationships gained by these non-banks are at the expense of mid-sized regional institutions. Banks in the $2 billion to $49.9 billion asset size range capture one-sixth (17%) of all businesses and personal relationships among owners that consolidate their household and business accounts to the same institution. Among owners that do not consolidate, less than one-tenth (9%) utilizes a mid-sized regional bank.

"Consolidation of business and personal relationships makes life easier for many small business owners, and that's why so many of them do it," said Marselli. "There must be strong motivation for an owner to go out of his or her way to separate business and personal financial relationships. I believe some self-examination on the part of these mid-sized regional banks is needed to identify what is causing this disparity."

Mike Marselli, a certified cash manager, has over 13 years experience in the financial services industry, serving with Dun & Bradstreet Information Services and PSI Global prior to joining Informa Research Services last year. His background includes experience in business-to-business market strategies, industry trend forecasting, e-commerce trend analysis, and primary market research.

The business owner market research study, performed by Informa Research Services, includes more than 1,100 interviews with small business owners. The study was conducted between February and June 2001, and consisted of telephone-based interviews with micro market companies throughout the US. The study has a +/- 3% margin of error at the 95% confidence level.

About Informa Research Services, Inc. Based in Calabasas, CA, Informa Research Services, Inc., provides the financial industry's most extensive array of market research and decision-support information.

Conducting daily surveys of the retail and business products offered by more than 5,000 financial organizations nationwide, Informa Research Services, Inc., currently supports the product pricing decisions of more than 2,100 clients, representing all 50 states and including the top 25 financial institutions. This electronically transmitted competitive pricing intelligence effectively generates profitable responses to continual market changes, enables clients to effectively position deposit and loan products within local markets, maximizes interest income, and manages interest expense. Informa is the premier provider of fee and feature studies used to determine the competitiveness of fee-based services. In-depth studies are also available on cash management services, trust products, mystery shops, and other specialized services.

Informa Research Services, Inc., is a division of London-based Informa Group plc (LONDON:INF). Informa Group offers "must have" business-to-business information through 3,500 conferences and seminars and nearly 1,500 print and electronic publications from offices in 19 countries.