2012 Business Banking Trust Study: Executive Summary
Key Findings plus Conclusions & Opportunities for Financial Institutions and Businesses
Our third annual study of small and medium business yields some familiar but still disconcerting results. Fraud continues to hit a majority of businesses, which continue to look to their financial institution (FI) as primarily responsible for securing the online channel. Businesses still are not improving their defenses, and a majority continue to lose money due to fraudulent transactions. Finally, businesses hit by fraud continue to take their business elsewhere, showing very little patience for an FI that can’t protect their accounts.
What’s new in this year’s study is a clear trend towards greater use of the online and mobile banking channels. And we have added new sections to specifically study businesses use of ACH, mobile, and wire, and the impact fraud has in each channel on the their banking relationships.
- Businesses are increasing their use of online banking. Businesses conducting all banking online increased from 9 to 20% since 2010, and now half of businesses conduct at least half of their banking through the online channel.
- Use of mobile banking is rising as well. Businesses accessing online banking from mobile devices increased to 54%, up from 23% in 2010.
- Businesses are looking to their FI for fraud prevention. 72% of SMBs indicate that their FI is most responsible for ensuring online accounts are secure. Perhaps such trust in their bankers helps to explain why the use of various fraud-prevention technologies has been flat since 2010; and 43% did not change security practices at all following a fraud episode.
- Fraud attacks are widespread. Two out of three businesses have suffered fraudulent transactions, and of these a similar proportion lost money as a result. For example, in the online channel, 73% of businesses had money stolen (i.e. there was a fraudulent transaction before attack was detected), and after recovery efforts, 61% still ended up losing money.
- Businesses are not reimbursed by their bank. While the levels vary by channel, approximately 7 in 10 businesses that suffered fraud losses were not fully reimbursed by their financial institution.
- When they suffer a fraud loss, the leave. After a fraud episode, 40% of businesses move some or all of their banking business. And 56% indicate that it takes only one fraud loss to lose confidence in their FI.
This study reflects the input from 998 small and medium businesses as defined by having less than 200 employees and generating less than $100M in annual revenue. The surveys were conducted in May 2012.