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July 30, 2006

Bank Mergers Seemingly a Small Factor in Where Small Business Banks

In the same NFIB poll I cited previously, many small businesses do not see bank mergers as a big factor in where they do business:

Since 2002, effectively post 9-11, one in four (26%) small-business owners has experienced a merger or acquisition of its principal bank. Most owners have not greeted this change with enthusiasm. For example, 42 percent of those affected say that it caused minor transition problems, while another 27 percent say that it affected them negatively. However, bank mergers and acquisitions motivated only 8 percent of those experiencing them (or 2% of the entire population) to change banks. Twenty-three (23) percent believe mergers and acquisitions involving their primary bank have either had no effect or had a positive effect on their business.

My guess is that small businesses do not immediately relate bank mergers and the turnover in personnel bank mergers cause. In the same poll, 64% of those small businesses who changed banks in the past three years did so for service quality reasons. Service quality is often related directly to personnel.

That said, this poll indicates that only 10% of small businesses have changed principal banks in the past three years.

Any comments on these poll results are welcomed.

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