What is Business Value-Added Checking? (Definition & Benefits)8 min read

Two Women Talking Business
(Last Updated On: September 5, 2019)

Growing Deposits Through Business Value-Added Checking

In the last three years, the top three banks – Bank of America, JP Morgan Chase and Wells Fargo – took in nearly 50% of the new deposit accounts. The remaining 50% was split among savings and loans, credit unions, community banks, and fintechs. 

Given the number of smaller institutions, the new deposit accounts per institution were less than you’d like. Hardly enough to thrive. A 2019 article in Forbes suggests that this year is the beginning of the end for small financial institutions.

A bit over-dramatic? Only if you’re not looking to the future.

How can you make sure your financial institution will exist for years to come?

Focusing on Small & Midsize Business

SMB. That’s not some new band. Ok, it might be; I’m no pop-culture expert. In this case, it stands for Small & Midsize Businesses. What defines these categories? Typically, a small business has up to 100 employees. A midsize, or medium-sized, business will employ between 100 and 999.

Looking Down On Three Business People in Meeting

Regardless of which size category these businesses fall into, they feel under-appreciated and misunderstood. At least that’s what their owners said in the J.D. Power 2018 Retail Banking Satisfaction Study.

That’s a huge percentage of dissatisfied customers waiting for a better solution to come along.

Exactly how huge?  The US has nearly 30 million businesses in this category, according to the US Small Business Administration.  If 75% of these 30 million businesses are dissatisfied, that means 22.5 million accounts are willing to change their primary financial institution for the right incentives.

Understanding SMBs 

What exactly are these businesses looking for?  A BAI survey found that business owners want:

Business People Shaking Hands
  • Easy-to-use products
  • Business-friendly policies
  • Better in-person environment
  • Customizable solutions
  • Improved financial tools

They are looking for value. They want actionable, real-time tools to improve everyday banking. They want a streamlined and seamless experience across all channels. They want a financial partner, not just a financial institution.

The BAI survey also found that these business owners have weak brand loyalty. They aren’t attached to a particular financial institution, meaning they are open to moving their accounts.

Plus, if you can attract a business account, you are likely to attract the associated personal accounts.  Most business owners (79%) have both their business and personal accounts at the same bank.

Business Sense (Disclosure)

Before we proceed any further, a bit of transparency.

Our organization represents the Business Sense program. This might be a perfect fit for your financial institution. It also might not. We believe it’s our responsibility to share what we learn to help you in your evaluation of business checking programs.

And now, onward to business checking!

Business Checking

Business checking is the cornerstone of a business account. And most are pretty similar. The six top-ranked financial institutions for a basic business checking account share the following features:

  • Minimum Balance. All but one of the top-ranked institutions require some sort of minimum balance. Depending on the account, the amount could be as high as $1,500. If you fall below, the account incurs a monthly fee.
  • Free Transactions. The number of free transactions per month ranged from 50 to 200.
  • Electronic Transactions. About half of the institutions offered unlimited free electronic transactions. The rest included electronic transactions in the total number of free transactions per month.
  • Fee per item. All institutions charge a fee if the maximum number of transactions is exceeded. The amount ranged from $0.25 to $0.60 per item.

Only one institution had no minimum balance on their business checking account.

None of the top financial institutions offer a business checking account that stands out. From terms to benefits, they’re pretty much the same.

It’s time to differentiate your business checking. Evolve to attract a portion of those 22.5 million unsatisfied business owners, while creating a substantial new revenue stream for your institution.

Value-Added Checking

Most personal checking accounts have some form of Rewards program. The specifics vary, whether it’s cashback on purchases, refunded ATM fees, or high-interest rewards. These perks are dependent upon debit-card usage and accompanying interchange fees.

Value-added checking accounts, on the other hand, have no debit usage requirements, and offer additional services to the account holder for a monthly fee.

Credit Card E-Commerce

What? Pay for checking? Sounds counterintuitive, right? Consider this: Half of American adults are members of Amazon Prime. Apple Music has nearly 30 million subscribers in our country alone. Now think about all the other subscriptions you maintain. From meal kits to premium movie channels to monthly beauty product boxes, we have a lot of them!

People of all ages, and especially Millennials, are willing to pay a fee if what they get in return has value. Consumers sign up (and retain) subscription services because they see value that far exceeds the cost.

You may already offer Value-Added checking on personal accounts. If not, such an account may include perks including:

  • ID Theft Protection & Recovery
  • Vision & Prescription Drug benefits
  • Accidental Death benefits (can serve as a supplement to your existing AD&D program)
  • Cell phone damage insurance

Given all these perks, it’s no surprise the accounts are popular. Yet few financial institutions offer value-added checking accounts for businesses.

Value-Added Business Checking

What would your value-added business checking account look like?

First, review your current business checking offerings to ensure they measure up to those top-rated programs. Now add value. The following are a selection of tools and programs available within a value-added business checking account. Each is designed to help your business partners reach their goals.

Payment Processing & Cash Flow

Pulling Credit Card Out of Wallet

Business owners need help managing their payments. Checks still rule in the SMB environment, and business owners need cash-management tools to help them integrate paper and electronic payment methods. Being able to find the information quickly saves the owner time and stress.

Additionally, cash flow is critical for these businesses, so your checking account can assist by including access to online loan applications.

Your institution can anticipate a company’s needs by offering services that grow with the company. Besides the aforementioned cash flow assistance and management tools, you can also provide payroll assistance and project profitability tracking.

It’s all about delivering value far beyond the cost, while adding to your bottom line.

Identity Monitoring & Management

Fingerprint Security

Cyber-crime threatens every business, large or small. For most, a data breach or ransomware attack can be crippling, sometimes taking weeks to recover. Finding cost-effective ways to protect against cyberattacks is time-consuming and ongoing, with few business owners even knowing what tools they need.

Protecting business owners against identity theft is a valuable way to demonstrate you are their true financial partner. If they need the service, a specialist is assigned to help them get their life and business back up and running.

Keeping a watchful eye out for such issues before they happen is another valued service. With cost-effective monitoring and disaster recovery support, your institution continues a commitment towards trust and building a long-term relationship.

Health and Wellness Discounts

Healthcare costs. Find a business owner who doesn’t cringe at the mention. It’s a huge source of stress and expense (ask your own leadership!). Through your checking offering, your institution can actually help enhance business owner’s health insurance plans, even providing valuable benefits.

From prescription cards that help reduce the cost of medications to vision and dental benefits, you can help companies bridge cost challenges in healthcare coverage.

And you can provide this, while saving them even more money. Giving businesses the tools to retain employees can save the company as much as 2.5 times the employee’s salary.  That’s significant savings for any sized business!

Shopping Discounts and Rewards

Coupons

Everyone loves coupons. Consider the value of giving business owners local and national merchant discounts they may then pass on to their own employees.

Congratulations! You just further improved their employee benefit package, improving both retention and loyalty.

The more you offer to help your business account holders thrive, the stronger the relationship becomes. And who do you think they’ll recommend their employees use for banking?

Non-Interest Income Growth

Your business customers and their employees aren’t the only ones to gain from the value-added benefits. This fee-based program generates an entirely new revenue stream. Make it easy and keep options open by adding a reasonable mark-up to each of the benefits.

More Business. Greater Trust.

Suddenly, a basic business checking account seems pretty bland, right? Offering value-added business checking can help you grow the lucrative business banking channel. Additionally, it opens the doors to onboarding their employees.

A solution like BusinessSense could produce significant growth for your institution. Of course, we understand it may not be a fit for all financial institutions. Let’s help you make that discovery together.

Simply schedule a time to talk to us about what value-added business checking would look like at your financial institution. Consider it your “15 minutes” to decide if it’s worth taking a closer look!

Learn more about our Value-Added Business Checking program. Still looking to better understand the business checking need? We get it. Take a look at Business Checking: An Emerging Opportunity.

Feature image credit: Photo by Amy Hirschi on Unsplash