''Small and very small firms are the backbone of the economy. They account for 50% of employment and 40% of value added in Europe. However, larger firms enjoy higher labour productivity due to economies of scale, modern processes and better qualified employees.
E-finance is less popular among small firms. Large firms in Europe are more likely to use online banking than small firms, but the difference is only a moderate nine percentage points (pp). In Germany it is practically nil. However, the shortfall is bigger when it comes to more advanced features of e-finance such as e-invoicing (20 pp) and automated payment instructions (27 pp).
Little surprise, you may say. Small firms are behind in applying modern IT services in general. This also adds to the overall productivity gap. The difference is biggest with the most advanced features, such as operating a CRM or ERP system.
Online banking is a first step to advanced e-finance. Across Europe there is a strong correlation between the adoption of online banking and more advanced features of e-finance. Yet, there is no correlation between online-banking adoption and other sophisticated IT applications, such as ERP.
Baltics ahead, Balkans need to catch up. In Estonia and Lithuania, the share of small firms using online banking is highest, while in Bulgaria and Romania it is lowest. In Germany, it is slightly above the EU average.
Online-banking adoption by small firms grows by 4% per year. This is less than the 5% growth rate among large firms, hence the gap has widened over the last few years. However, convergence will kick in eventually, if only because adoption among large firms cannot rise much further.
What is personal, what is business? Particularly among owners of very small firms, there is much overlap between personal and business affairs. As a consequence, a majority of small business owners wants to keep personal and business bank accounts with the same financial institution, according to a US survey.
What about self-employed persons and freelancers? The propensity to bank online rises with the degree of business responsibility. Evidence from Germany shows that online banking is more popular with business owners than with self-employed persons or freelancers. But even they are ahead of regular employees. The only exception is self-employed farmers where living in rural areas may trump being a business owner.
Interest in online brokerage is higher among business owners. Persons with business responsibility are also more likely to be interested in trading stocks online. This may be explained in part by higher incomes and better education but it also appears that business owners and the like are simply more self-directed.''