Market Overview

Anticipated Growth May Spur Small Business Lending, New Accounts, Shows Research from Raddon

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RaddonSM, a Fiserv® company and provider of
innovative research, insightful analysis and strategic guidance to
financial institutions, has published research that shows the majority
of small businesses are planning for growth, which they anticipate
funding through lines of credit and business loans. According to the Raddon
Research Insights: Winning Small Business Customers
study, 79
percent of small businesses plan to grow over the long term, which could
create lending opportunities for financial institutions.

This Smart News Release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20170525005534/en/

Projected source of funding for small business growth, Raddon Research Insights 2017 (Graphic: Busin ...

Projected source of funding for small business growth, Raddon Research Insights 2017 (Graphic: Business Wire)

"When looking for a loan small businesses tend to look to their primary
financial institution, so attracting small business deposit accounts can
serve as the entry point for future loan business," said Bill Handel,
vice president of research, Raddon. "Financial institutions can win
small business customers by demonstrating that they understand business
owners' challenges, have the expertise these customers need, and can
deliver the technology and service to help small businesses grow."

Small Business Growth Creates Lending Opportunities

Of the 79 percent of small businesses planning for growth, about a third
(38 percent) said they plan to use a business line of credit for
funding, whereas 22 percent said they plan to use a business loan. These
percentages rise to 50 percent for a business line of credit and 26
percent for a business loan among larger small businesses with $2
million to $10 million in annual sales.

Importance of Technology

When it comes to deciding whether to use a financial institution's
services, small business customers of major banks were the most likely
to cite technology as a factor in the decision. Among small business
customers that use a major bank as their primary financial institution
(PFI), 66 percent indicate the technology resources available at the
institution influenced their decision to use the bank, with 29 percent
saying it strongly influenced their decision. Small businesses with a
credit union as their PFI also showed a significant interest in
technology, with 42 percent saying technology influenced their decision
and 16 percent saying it was a strong influence.

Although 91 percent of small business customers still make branch visits
in a typical month, technology is starting to reduce branch traffic.
Forty-two percent of small businesses indicated they now use branch
lobbies and drive-ups less frequently due to the availability of online
banking, mobile banking, and remote deposit. Looking forward, one in
three small businesses (36 percent) think technologies such as mobile
and online banking could potentially replace their need for a branch
office of their PFI near their place of business.

Winning Small Business Customers

While major banks currently control the small business market with 68
percent of primary financial institution relationships, there are
opportunities for community-based financial institutions to serve more
small businesses, with small business owners indicating a likelihood to
work with such institutions in the future.

Over 50 percent of small businesses that currently do not use a
community bank for their primary or secondary institution said they were
extremely or very likely to consider using a community bank in the
future, and 38 percent said the same for a credit union.

The research in the Raddon Research Insights: Winning Small Business
Customers study was gathered from semiannual surveys conducted in 2014,
2015 and 2016. Each survey of approximately 1,200 small business owners
was conducted via an online questionnaire administered through a
national online panel of small businesses, with respondents qualified by
having decision-making responsibility for financial services for their
company.

An Executive Summary of the research is available at https://fisv.co/raddonsmallbizinsights
and the full 49-page report can be purchased at raddon.com.
Raddon will host a webinar on the study on June 8, 2017 for purchasers
of the report.

About Raddon

Raddon, a Fiserv company, has been providing financial institutions with
research-based solutions since 1983. Raddon works exclusively with
financial institutions and has a unique understanding of the industry,
resulting in the ability to apply practical know-how to the challenges
and opportunities financial institutions face. Raddon combines best
practices in research and analysis with consulting and technology
solutions to help institutions achieve sustainable growth and improve
financial performance.

About Fiserv

Fiserv, Inc. (NASDAQ:FISV) enables clients worldwide to create and
deliver financial services experiences that are in step with the way
people live and work today. For more than 30 years, Fiserv has been a
trusted leader in financial services technology, helping clients achieve
best-in-class results by driving quality and innovation in payments,
processing services, risk and compliance, customer and channel
management, and insights and optimization. Fiserv is a member of the
FORTUNE® 500 and has been named among the FORTUNE Magazine World's Most
Admired Companies® for four consecutive years, ranking first in its
category for innovation in 2016 and 2017. For more information, visit fiserv.com.

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