Not only small businesses operate out of consumer accounts

It may seem that only a small business would operate out of a personal checking or savings account. However, our analysis of Alkami’s data panel shows that of the businesses operating out of consumer accounts, the median monthly business expenditures was $114K. In other words, half of the businesses in the sample are spending $114K or more each month, equating to $1.36M per year. The largest businesses found operating out of consumer accounts had more than $15M in business expenditures each month. From our analysis of payroll and benefit expenses out of the same data panel, we discovered one business operating out of a consumer account spent over $100M on payroll and benefits over the last year.

It’s likely there are opportunities for financial institutions to promote business banking solutions to these successful business owners. By leveraging transaction enrichment, financial institutions can find businesses operating out of retail accounts.

Reveal business banking opportunities with transaction enrichment

Though there may be businesses operating out of retail accounts, how can financial institutions find and engage these account holders? Start with the data you already have – your financial institution’s core and transaction data. These rich data sources reveal consumer accounts that have significant business-specific transactions.

But for many financial institutions, this data is unstructured and in disparate systems. To make sense of these rich data sources, you may need a team of data scientists to gather, cleanse, and organize all the data. Unstructured data is the most time-consuming aspect of the typical data scientist’s job. Studies show data scientists spend nearly 40% of their time gathering, analyzing, cleaning, and reorganizing data. This means financial institutions with data scientists on staff may not have immediate access to real-time transaction enrichment because they have to spend so much time preparing the data for analysis. Then data scientists don’t have as much time to analyze the data, which is the part of the job they really enjoy.

Alkami Transaction Data Cleansing enables financial institutions to better understand transaction behavior and model spend patterns. It transforms complex transaction descriptions into simple merchant names, merchant categorizations, and logos to normalize and contextualize the data. Our library science methodology blends human and machine capabilities to provide the fastest and most accurate data enhancement available. With an extensive knowledge base of merchant transaction variants, we can accurately enrich transactions as they occur. This enables real-time transaction enrichment for your financial institution, without wasting time on preparing the data.

With cleansed data in hand, financial institutions can easily find the consumer accounts with business-related expenses. The next step is to activate this data through marketing. With marketing automation, financial institutions can target offers for business banking solutions to these specific account holders.

Use transaction enrichment to activate your business banking marketing

Businesses operating out of retail accounts inside your financial institution could have significant monthly business expenditures. These businesses can benefit from the products and services that are built and offered specifically for business banking. Financial institutions should use this as an opportunity to engage with this segment and grow the business portfolio. Payroll transactions or other benefits can be a point of outreach for a financial institution when trying to convert these retail accounts to business accounts.

When strategizing how to convert businesses operating out of consumer accounts to business banking products, understanding each business’ unique business operations and expense structure can provide the foundation for tailored and relevant messaging for marketing campaigns. For businesses with significant payroll, benefits and other working expenses, consider suggesting a business line of credit or a financial plan to help manage cash flow.

Financial institutions can use their transaction data to identify not just which retail accounts are operating businesses, but also the industry sectors of these businesses to offer upgraded business accounts and services tailored to industry-specific needs.

Unlock business banking opportunities through transaction enrichment strategies

In summary, transaction enrichment is more than just a technical tool; it’s a strategic asset for financial institutions aiming to tap into hidden business banking opportunities. By deploying advanced transaction enrichment techniques, like those offered by Alkami Transaction Data Cleansing, financial institutions can transform obscure transaction data into actionable insights. This not only streamlines the data preparation process but also accelerates the ability to engage with and convert consumer account holders into valuable business banking clients.