From Our Consumer Banking Report: What are the Current Banking Attitudes and Behaviors of Business Owners?

In 2022, we surveyed 26,000 banking consumers across eight countries to discover the emerging trends, attitudes and behaviors influencing the banking landscape. As part of this survey, we also wanted to understand the banking habits of consumers who are small business owners. Through analysis of the data we collected, we uncovered some surprising results.

About the Population Surveyed

Of the 26,000 consumers we surveyed, 2,671 (10.3%) self-identified as either freelancers, self-employed, gig economy workers or business owners. For comparison’s sake, we looked at industry metrics to see if our respondent population was far off from reality. According to ThinkImpact, there are 582 million entrepreneurs in the world, which equates to roughly 11.1% of the world’s adult population of 7.8B people, per UN data. Exploring further in the entrepreneur statistics from ThinkImpact, 16% of Americans are entrepreneurs, which closely aligns with the 14.2% of US consumers in our survey that self-identified as business owners.

By country, there was a difference in the breakdown between self-described business owners (as defined by the categories noted above) and non-business owners. 

Characteristics of Business Owners

Across all eight countries we surveyed, business owners had the following characteristics:

• Age: The majority of self-identified business owners were under 45, with 48% being Millennials and 15% Gen Z. Country variations existed, with the Netherlands, Singapore and Australia having similar age distributions to the average noted above. Germany, Canada and the UK had a more even split among the various generations, while the US and Hong Kong had a significantly higher proportion of younger business owners.
• Gender Identity: For the overall consumer survey, 51% of respondents identified as female, 48% as male, and 0.6% as nonbinary. For business owners, however, male (56%) and nonbinary (1.4%) people were more prevalent compared to the general population. Country differences included a higher number of women business owners in Australia (50.6%) and a significant gender disparity in the US (64.5% male and 34% female). Hong Kong and Singapore had a higher percentage of nonbinary business owners, at 3.5% and 2.3% respectively.
• Industry: No specific industry dominated, but notable sectors included IT, retail/wholesale, financial services and education.
• Number of Employees: Over 50% of business owners had five or fewer employees, while 24% had over 100 employees. Country variations existed, with the UK and Germany having more sole proprietors, and Hong Kong having a larger number of businesses with 100 to 499 employees, see Figure 2.

• Innovation Adoption: Business owners showed a tendency towards being innovators/early adopters of technology, with 51% identifying as such, compared to 42% in the general population. Only 13% of business owners identified as laggards of technology adoption.

Business Owner Banking Channel Use

As we track the continued growth of digital channels for consumers, we wanted to understand how that translates to small business owners:

• Branch Use: Many banks lack digital capabilities for small business owners, resulting in higher physical branch usage compared to general consumers. Over 33% of business owners reported using branches weekly, while only 20% of the general consumer population reported doing so. The US had the highest branch usage among business owners, with nearly 46% using branches weekly. Other countries had lower rates, as shown in Figure 3.

• Bank Website Use: Among surveyed consumers, 47% use their bank's website weekly, while 9% do not use it, even on an annual basis. Business owners reported higher usage rates at 52% weekly, and only 6.6% claimed they do use their bank’s website, even on an annual basis. This pattern was generally observed across most countries, with American business owners having the highest weekly usage (57.8%) and business owners in Singapore having the lowest (41.5%).
• Mobile App Use: For the general population, mobile app usage is higher than other channels, with 64% of consumers using their bank's mobile app weekly. However, 14.2% of the general survey population reported never using their bank’s mobile app. Among business owners, 65% used the bank's app weekly, with 9.7% never using it. There were country variations, as depicted in Figure 4. The US (70.4%) and the Netherlands (69.8%) had the highest weekly app usage rates among business owners, while Germany (57.4%) and Canada (53.4%) had the lowest. German business owners had the highest percentage (20.2%) of no app usage, followed by Australia and Canada (17%).

Small Business Owner Satisfaction

To determine satisfaction with their primary bank, we asked respondents several questions. Two dimensions that we explored with business owners were happiness with their primary bank and satisfaction with the digital experience provided by their primary bank. 

• Happiness: Overall, the vast majority (83%) said they were happy and only 4% said they were unhappy with their primary bank. The response from business owners didn’t differ significantly from the general population. The majority reported being happy (81%), although a larger percentage overall (6%) said they were unhappy.
• Digital Experience: We expected to see business owners being more critical than the general population of their primary bank’s digital experience. This didn’t occur. Overall, 44% of consumers said they were very satisfied with their primary bank’s digital experience with a further 41% saying they were satisfied. Business owners were slightly less positive with 43.6% saying they were very satisfied and 40% saying they were satisfied. Only 2.2% of the general population said they were dissatisfied, while 3.1% of business owners noted the same.

Choice of Bank and Bank Accounts

We were curious about the relationships between a business owner’s personal and business accounts. However, we came away with more questions than answers:

• Using the Same Bank: Most of the business owners that responded (62.7%) use the same bank for both personal and business banking. However, there were large differences in response by country. German (70.7%) and Dutch (70.4%) business owners seem to prefer to use the same bank. However, business owners in Singapore (41.8%) seem to prefer to have separate banks. The rest of the countries preferred the same bank at rates close to the average. For those that preferred to have separate banks, a majority (68%) said it was just a preference, with smaller number of business owners choosing deficiencies in services, digital capabilities or fees as deciding factors.
• Commingling Personal and Business: We were surprised by the rate of commingling between personal and business banking accounts.  Of those that answered the question, 47.9% admitted to using their personal account for business. Both Singapore and the US had the largest reported rates of use of personal accounts for business, with Germany and the Netherlands at the lowest end of the spectrum. Even at the low end, however, there is still a significant amount of use of personal banking accounts for business purposes.

Next, we wanted to see if the size of the business made a difference in the rates at which the owner used their personal account for business purposes. Going in to this survey, our assumption was we would see a higher rate of use of personal accounts for business banking among smaller businesses. What the results of our surveyed showed, however, was shocking.

While sole proprietors did show a high rate of use of their personal account for business purposes (54.3% of sole proprietors reported doing so), owners of businesses with 100 to 499 employees (56%) and businesses with 500 to 999 employees (73.3%) had even larger rates of using their personal bank accounts for business purposes. Further, even owners of businesses with over 1,000 employees reported high rates of using their personal accounts for business purposes (49.3%). See Figure 6.

When we asked business owners why they use their personal accounts for business, the largest number of respondents (33.3%) answered that they prefer to keep their money in a single centralized place. The next most popular answer (28.6%) was that they didn’t qualify for a business account.

Conclusion

Across all the countries we surveyed, we found that small business owners act in many ways like consumers. From a bank delivery standpoint, digital is the dominant channel for small business owner experiences. The good news here is, in general, banks are providing the expected level of digital experience for most business owners, which is likely a factor in their overall happiness with their primary bank. On the other hand, branch use by business owners continues to be high, which does hint at shortcomings in the digital capabilities offered by banks.

That said, there is a continued opportunity for banks to better serve business owners and small businesses in general, as noted in the shocking number of business owners using their accounts for personal and business use. For example, many banks do not allow a business owner to view all their accounts, personal and business, within their digital banking. Sometimes moving funds between these accounts is made difficult due to bank rules. Improving and building on these digital capabilities could provide certain banks with a competitive advantage.