Silent Churn: The Threat is Real

By Q2

7 Jun, 2019

A lot of financial institutions (FIs), especially community banks and credit unions, have become their account holders’ primary FI in name only. While the FI may hold checking accounts for their customers and members, they’re losing out on the most profitable products—like credit cards and mortgages—when their account holders seek out secondary banking relationships based on convenience.

We often associate this “silent churn” with consumer accounts, but it poses a threat to FIs offering business accounts as well—especially as fintech continues to disrupt an increasing array of financial services.

We often associate “silent churn” with consumer accounts, but it poses a threat to FIs offering business accounts as well.

In fact, one the greatest threats of this churn comes from “neobanks”—fintech companies with the backing of traditional banks that are able to offer front-end, mobile-centric financial services. Most of these are consumer-focused, due to the greater complexity associated with business services, but a 2018 Javelin Strategy & Research report outlines numerous neobanks that are effectively targeting businesses.

The business areas neobanks are focusing on include:

Accounts receivable and invoicing.

The ability for small businesses to create invoices in-app, rather than rely on tools outside of their banking application, can streamline bookkeeping and help users reconcile their invoices quickly and easily.

Business tool integration.

Apps that integrate with payment tools like Stripe or enable exports of transactions to Excel, QuickBooks, or other accounting tools can drive efficiency for time-strapped small business operators.

Digital onboarding.

Online account opening helps busy small business owners avoid trips to bank branches during business hours, waiting in line, gathering various forms of ID and data (e.g., tax ID numbers), and filling out multiple paper forms.


Some neobanks are embracing the alt-lending innovation of companies like Kabbage and are offering small businesses a “living, breathing” line of credit.

Card controls.

Companies like Qonto and Bento have focused almost entirely on startup and freelancer business accounts and cards that can either replace or supplement existing business banking accounts.

Luckily, silent churn can be controlled, if not fully prevented. But to maximize the value of being their account holders’ primary FI and promote the cross-sell of profitable products, FIs must:

  • upgrade their digital capabilities, including onboarding and cross-sell competencies,
  • offer (and market) comprehensive services, in-branch and online,
  • and demonstrate to account holders the value of keeping all of their financial services under one roof.

Recapturing these “lost” account holders isn’t easy, but it can often be avoided from the get-go by removing the friction from account opening, and using it as an opportunity to introduce additional services. A frictionless, comprehensive, and positive onboarding process can translate to better engagement in the long term, greater retention, and increased profitability.

To learn more about Javelin’s research on neobanks, silent churn, and digital account opening for businesses, check out the webinar they co-presented with Q2, Solving for Small Business Digital Account Opening.


Written by Q2