By: Eelco-Jan Boonstra, Managing Director, EMEA, at Mambu
Fired, furloughed or working from home: has there ever been a better time to start a business than during the pandemic? With analysis of Companies House data suggesting that almost 80 new businesses were created every hour across the UK in the first half of 2021 and HMRC data finding more new businesses were set up in March 2021 than in any other month since records began in 1989 – the past eighteen months have given real meaning to the old adage ‘adversity breeds innovation’.
Some of these businesses have been born out of necessity. Following a wave of redundancies and furlough, many established companies struggled to make ends meet. Others have been lightbulb moments inspired by new market opportunities caused by Covid. We’ve also seen side hustles turn into the ‘main hustle’ or primary source of income, as people have been inspired to take the leap.
Who are Covidpreneurs?
In a survey of more than 4,500 banked customers globally, designed to understand the emerging consumer finance tribes that banks should be engaging with, Mambu discovered a small but lucrative cohort of Covidpreneurs. Accounting for one in 14 (7%) of respondents, these are individuals who have started their own business during the pandemic or intend to start one in the near future – and they’re driving growing demand for reliable business banking services.
These new business owners skew the youngest of any tribe, with almost two thirds (64%) aged under 35 and a quarter (25%) under 25. Younger generations account for the largest proportion of consumers globally and have growing spending power, making them valuable customers to build relationships with.
Covidpreneurs are ambitious, and they’re relatively loyal: less than one in five (18%) said they switched banks in the past eighteen months, suggesting that once these customers are on side, they tend to stay – so they’re worth investing in right from the start.
So, how can banks tailor their offerings to meet the demand from this rapidly growing group?
Show them you mean business
It’s no surprise that three quarters (74%) of Covidpreneurs suggested that ‘favourable business services’ are important in a bank or financial institution. Services, however, are under scrutiny and customers are on the hunt for the best business banking partners. Tailored SME support and lending packages are highly attractive to this audience and always-on, reliable services are essential.
Entrepreneurial by nature, this group is more open to embracing new payment methods and non-traditional assets, with 62% becoming more likely to purchase neo assets such as cryptocurrencies over the past eighteen months. While they’re attracted to innovation, they value rigour and security when it comes to their banking services. Many expressed concerns about some digital banking providers not being fully licensed or lacking the guarantees of established financial institutions. Reassuring these customers about the strength of a bank’s credentials will provide a competitive advantage.
Help them do what they do best
Over half (49%) of this tribe have started a new business or side hustle during the past eighteen months, and three quarters (75%) are thinking about doing so. Launching a new business is tough and often all-consuming.
Two thirds (64%) are willing to pay a premium for banking services that save them time. This presents an excellent opportunity for financial institutions to step up and provide the support needed. To be a successful partner, banks should lend Covidpreneurs a helping hand through fast-track and easy to use services, so they have more time to focus on what they do best.
Covidpreneurs are dedicated savers with an entrepreneurial investment mindset. In fact, three quarters (74%) prefer saving or investing their money than spending it, with 69% citing ‘being part of a new venture’ as important when investing. Banks should reward this approach with cashback offers and competitive loyalty programmes, along with best-in-class financial advice services.
Supporting the future of entrepreneurs
If banks want to thrive in the future, they must affiliate themselves with the dynamically changing groups in society and appeal to their shared values and financial needs. Clearly, with so many people using the lockdowns as a springboard to start businesses, a lucrative opportunity exists to engage with a growing pool of potential customers who are looking for help. By supporting entrepreneurs and their new businesses during this challenging economic period, banks will create an army of loyal customers that will pay dividends when the economy recovers.