By: Kyle Enger, Executive Vice President of Finagraph
Small business remains one of the largest and most profitable client segments for banks. They provide low cost deposits, high-quality loans and offer numerous cross-selling opportunities. However, recent reports indicate that a majority of business owners are dissatisfied with their banking relationship. In fact, more than 33 percent are actively shopping for a new relationship.
With limited access to credit after the worst of the financial crisis, plus a lack of service and attention, many business owners have lost confidence in banks and their bankers. Before the financial crisis, business owners ranked their banker number three on the list of top trusted advisors. Today bankers have fallen to number seven – below the medical system, the president and religious organizations, as reported in a recent Gallup poll, “Confidence in Institutions.”
In order to gain a foothold with existing clients and prospects, here is a roadmap banks can use to build trust and effectively meet the needs to today’s small business client.
Put feet on the street.
To rebuild trust, banks need to get in front of their clients face to face and begin engaging them on a deeper level. Even in the digital age, business customers still want to have face-to-face contact with their bank. The only way to effectively do that is to put feet on the street and begin having conversations with clients. Whether it be via Skype, phone calls, text, e-mail or Twitter – having knowledgeable bankers accessible is the first step in creating a trusting relationship.
Develop business acumen.
The top complaint that business owners have about their banker is that he/she does not understand their businesses. During the real estate boom, banks became incredibly transactional. In lieu of developing career bankers that were fostered through internal management training programs, banks hired sales personnel who could move from one transaction to the next. This churn-and-burn approach works for real estate, but is disastrous for small business which requires a relationship-based approach.
Business owners need someone who is aware of their pain points, can offer the correct products according to their financial need, and can provide a long-term plan for growth. In order to do so, banks need to invest in the developing the business and relationship acumen of their sales forces to empower them to be trusted advisors. One of the best ways to launch a new class of relationship bankers is to start investing in educational events for both the bankers and the borrowers. This creates an environment of learning, transparency and growth.
Leverage technology to enhance client relationships.
Commercial and industrial lending is an expensive delivery strategy because it means bankers are constantly working with business owners on a regular basis. This approach can be time-consuming and costly as bankers must monitor inventory, understand financials, and make recommendations to improve the financial health of a business. However, if banks leverage technology to provide bankers with the tools needed to be more effective in their interactions with clients, they can create a winning combination. Some examples of this include providing online chat, an educational forum, and a financial intelligence tool to quickly review financials, provide recommendations and make loan decisions.
Authenticate your value proposition.
Business owners have choices when it comes to selecting a financial service provider, which is why it is important that every banker has a clearly defined value proposition. A value proposition is more than a generic list of attributes developed from a routine sales training program. It is a way of interacting, responding and collaborating that validates those words and makes a value proposition come to life. Simply claiming to provide the best service means nothing if it takes 48 hours to return phone calls. Words are meaningless without action, and business owners are particularly jaded when it comes to false elevator speeches delivered by bankers.
Never stop reaching out.
Throughout the lifecycle of a business, its owner uses between 12 and 15 bank products and services, yet the national product per customer ratio averages around 2.5. Simply put, companies are spreading their banking needs across multiple organizations. The primary cause? The banker likely never asked them if they had any additional businesses or needs. As a relationship banker to small businesses, it your duty to bring the power of the bank to the individual client.
This means that regardless of the silos that exist in an organization, a relationship manager must be empowered to bring in internal product partners to provide the best solution for the client. This is where most fail. Simply making a referral to treasury management is not enough to be successful in this segment. True relationship bankers are responsible for crafting the solution, bringing in the appropriate product partners, facilitating solutions to completion and monitoring the business to success.
By focusing on adding value through superior customer experience and technology, financial institutions will be better positioned to attract new small business banking clients and expand wallet share with existing clients. By implementing these five strategies, you will create closer relationships, stronger loan portfolios and a new generation of relationship bankers.