Small businesses reported more satisfaction with banks during the pandemic compared to previous years, according to a recent J.D. Power survey, but the size of the business and success with the Paycheck Protection Program affected satisfaction.
The overall satisfaction that small businesses had with their banks reached a record high in J.D. Power’s annual U.S. Small Business Banking Satisfaction Study, according to a statement from the data analytics firm. The 2020 study, which was released last week, included responses from 7,507 small business owners or financial decision-makers at small businesses that use business banking services. The study ran from June through August.
“The pandemic has created a moment of truth for small business banking customers and, by and large, their banks delivered, generating significantly improved satisfaction for problem resolution, products and fees, reputation and reliability,” Paul McAdam, senior director of banking and payments intelligence at J.D. Power, said in a statement. “Overall, these banks have delivered when their customers needed them most.”
According to the study, overall satisfaction was 822 on a 1,000-point scale, up two points from 2019. The level of trust with their bank also improved in 2020.
But performance was not balanced across all small business segments, McAdam said.
“While customer satisfaction among larger small businesses has improved, the smaller businesses in our study – those with annual sales volume below $2.5 million – have seen significant declines in satisfaction,” he said. “That’s a sign that many banks still need to refine their small business formulas to address this highly diverse market.”
The businesses with annual sales between $2.5 million and $20 million had a nine-point increase in customer satisfaction in 2020 from 2019. Smaller businesses with annual sales of less than $2.5 million had a five-point decrease in satisfaction from a year ago.
Smaller businesses indicated significantly more negative outlooks on the economy and business, according to the study, with 19 percent of them responding during the survey that they were still temporarily closed.
The PPP also had a role in customer satisfaction. The study found that 36 percent of small business banking customers applied for a PPP loan through their primary bank. For customers with a PPP application that was approved, customer satisfaction was significantly higher (838) compared to those with an application that was declined or still pending approval at the time of the survey (796). Ratings for trust, advocacy and retention were also significantly higher for customers satisfied with their bank’s support during the PPP.
The study also found that small business banking customers had significantly higher satisfaction if the bank had assigned a dedicated account manager to the business. Account managers also drove satisfaction with PPP loans and overall pandemic response by helping customers resolve problems and address concerns, according to the study.
In the Northeast, which includes New England, New Jersey, New York and Pennsylvania, the regional average was 819 on the 1,000-point scale. The top eight banks listed were national and regional banks, with Capital One having the highest score at 857, followed by Chase at 829 and Bank of America at 828.
