As more and more banks begin to shift their inward “survival” focus to one of growth, business is emerging as a key opportunity for many banks to increase sales and improve retention rates. 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.
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 other financial service professionals. 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.
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 banking 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.
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 want a banker who understands the difference between a manufacturer and a service business. They need someone who has an awareness of their pain points and how to offer products and solutions as remedies. 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.
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: monitoring inventory, understanding financials, making 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.
Today there are many great financial technologies for banks and their commercial and retail clients. Two of them include Finagraph and First Research:
- Finagraph is a financial intelligence tool that displays detailed analytics and information in an easy-to-read visual format. The software securely transmits the last three months of income, expenses, receivables and payables data to the banker or investor by electronically capturing data contained in the most widely used accounting systems.
- First Research provides profiles of more than 100 industries, highlighting risks and opportunities, as well as call preparation questions. When used in conjunction with Finagraph, it enables bankers to have a complete understanding of a client’s or potential loan customer’s financial performance in relation to industry analysis
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 then a generic list of attributes that is developed as a part of a routine sales training program. It is a way of interacting 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.
Develop a quarterback mentality.
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 for the additional business or what their additional needs were. As a relationship banker to small businesses, it is important 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. Here’s the key point that often gets lost: the quarterback never leaves the field while the ball is still in play. This means that the relationship manager is responsible for crafting the solution, bringing in the appropriate product partners and facilitating solutions to completion. This is where most fail. Simply making a referral to treasury management is not enough to be successful in this segment.
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.
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Kyle Enger, the founder and CEO of Relationship Banking Academy, can be reached at kenger(at)bbillc.com. James Walter, CEO and co-founder of Seattle-based Finagraph, can be reached at james(at)finagraph.com.