How advanced analytics can help banks better engage with small businesses

December 2022 | Audrey Bui Khac, vice president, small and medium enterprises segment

Small businesses are one of the most underserved segments in a bank's customer base. And cards is one area where banks have really struggled to connect with small businesses. Indeed, 76% of small businesses in the United States still use their personal card for business expenses and 53% use both personal and business cards.

A recent Mastercard study shows that encouraging small businesses to use a commercial payment product can generate incremental revenue for the bank and give small businesses a payment product more tailored to their needs.

To increase the profitability of banks’ small business portfolios and drive incremental usage of the cards, a personalized approach is key. Not all small business cardholders have the same spend uplift potential. Nor will they be sensitive to the same messages. Considering the variety of small business profiles, one-size-fits-all customer engagement strategies are even less relevant than they are with consumers. Personalization is not only required to address specific expectations of small businesses, but it can also maximize the ROI of banks’ marketing campaigns.

To help banks build personalized approaches to their business customers, Mastercard developed a new set of analytics (propensity models) and marketing capabilities that enable financial institutions to prioritize small businesses with the highest likelihood to respond to spend stimulation invitations.

After running these new models in the U.S., we estimate that about 25% of small business cards in the market represent an immediate opportunity to increase spending and bring potential additional value for banks and small businesses.

By focusing on those 25% of small business cardholders in the market who have the highest propensity to react to targeted spend stimulation campaigns, Mastercard estimates there is a 12%-20% spend uplift potential on the total card portfolio.

Banks have a strong incentive to stimulate small businesses to spend on business cards. But what are the right strategies and recommendations to spark small businesses to use business cards? That’s where insights and the right engagement strategy play a role.

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