Bank of Montreal’s Harris Bank snapped up a couple of plaudits from Greenwich Associates, as the firm announced the winners of its 2005 Excellence in Business Banking Awards.

Greenwich recognized a total of 40 banks for service excellence in business banking. The awards are based on the results of Greenwich Associates’ 2005 Business Banking program, a biennial survey which this year included interviews with over 22,000 businesses with annual sales of US$1 million to $10 million, in 66 major markets.

Harris Bank was cited as one of eight outstanding Midwest banks in the ‘overall banking services’ category, and it was also cited at the national level in the same category. The awards are presented at national and regional levels. At the national level, banks are recognized in six categories; at a regional level banks receive awards in two categories. Awards were presented to commercial banks based on distinctive satisfaction at a 95% confidence level.

“Competition for small business customers has become intense in recent years as large multi-state banks have responded aggressively to the ‘high-touch’ relationship model typically deployed by community banks,” said Greenwich Associates consultant Don Raftery. “Both our research results and the lists of award winners in multiple categories suggest that, within the last two years, larger U.S. banks are narrowing the qualitative ‘gap’ relative to community banks,” he added.

The resurgence of quality at the larger banks has been supported in part by a sharp increase in the adoption of online banking services by small businesses, Greenwich said. “Since 2001, the percentage of companies using online services has more than doubled, from 28% to 68%,” said Greenwich Associates consultant Pete Garrison. “Since the largest banks have made the greatest investments in their online capabilities, they benefit the most from the migration of business banking customers to the Internet.”

Improvements in service quality at the branch level also are giving a boost to the overall performance of large banks relative to their community-bank competitors. Among the 10 largest banks in the United States, nine saw increases from 2003 to 2005 in the scores awarded by their business banking clients in evaluations of their performance in resolving customer problems. “Our research shows that, of all aspects of customer service, branch service quality has the highest correlation with overall customer satisfaction in business banking,” says Greenwich Associates consultant David Fox. “This is a logical finding, since 80% of the small business participants in our study reported that they visit their local branch on at least a weekly basis.”

Another key determinant in small businesses’ satisfaction with the service quality of their bank is the simple question of whether or not their bank assigns them a relationship manager. “Banks typically assign relationship managers based on the bank’s credit exposure to a client,” said Greenwich Associates consultant Bob Neuhaus. “With more than half of small businesses not using bank credit, non-borrowers often don’t have access to the expertise and general business advice provided by a banker. With the proliferation of non-credit services and major cross-selling opportunities, banks will need to rethink their coverage models to provide better service coverage to non-borrowers.”