Members of the Vertical IQ team recently attended the American Banker Small Business Banking Conference in Austin. The agenda for the three-day conference included outstanding expert panels, workshops, and keynote presentations. Here are some of the highlights.

A few quick facts from SBBC:

  • Small businesses are an attractive market for banks because they provide a higher ROE, faster organic growth, and low-cost deposits. Small business owners are more positive about the outlook for their cash flow and profitability than they have been for the past six years. In fact, 71 percent of owners are “confident” about the future of their business.
  • Banks often struggle with how to service small businesses—they are too big for consumer banking but too small for corporate banking. Many banks are looking to digital banking as a way to meet the needs of small businesses, particularly newer businesses owned by millennials.
  • According to research on banking channels over the past three months, 84 percent of small businesses used a branch, 82 percent used the web, and 78 percent used a mobile app. While small business owners like the convenience of digital, branch usage is not going down, so the question becomes: How do banks best leverage digital banking to meet customer needs?

Vertical IQ Spotlight Sessions

Keynote Address: Driving Small Business Growth in an Ever-Changing Payments World
Ginger Siegel, North America Small Business Lead, Mastercard

Banks must adjust their thinking to maintain relevancy and deliver innovative solutions and superior service to the small business customer. Right now, value propositions are product- and price-focused and business operations are manual. Banks say they are “needs-based,” yet they continue to focus on products. In reality, most business owners don’t need credit cards, loans, lines, etc.; what they need is to manage cash flow, and they want speed!

When considering a strategic partner, banks should do a capability GAP assessment. What are you (as a bank) capable of, and where are you deficient? Find a partner that complements your shortcomings. Strategic partnerships through APIs can take clunky, outdated systems and make them more functional, but be sure to pilot your plan, as this allows you to be agile and test effectiveness.

Lessons from The Best: Earning Small Business Customers’ Satisfaction and Loyalty
Facilitated by Bob Neuhaus, Senior Director of Banking, J.D. POWER

Banks that are building trust with customers are putting the customer first, fulfilling service expectations, providing useful guidance and advice, and taking responsibility and resolving mistakes. The experience in the branch for borrowers versus non-borrowers is different. Non-borrowers score their banks significantly lower in satisfaction than their borrowing peers in areas like understanding my business, providing solutions, fulfilling service expectations, providing guidance and advice, to name a few.

How ANZ Bank Drives Small Business Customer Engagement
Kathryn Sheehan, Marketing Manager, ANZ Bank New Zealand

Contact strategies for banks to engage business owners start by developing customer-centric content (since content drives awareness), and any type of contact strategy or campaign must have goals and be measurable. There is a cost associated with any successful campaign, and banks need buy-in from key stakeholders.

If a campaign is intended to attract new business owners as clients, banks must speak their language and understand how they think. For example, entrepreneurs launching a start-up move through three stages before launching their business (but at different speeds): Dream, Plan, and Do. In the Dream phase, they are looking for inspirational and helpful articles and information. When they move into the Planning phase, they are seeking start-up guidance. In the Do phase, they are ready to execute and attend to details.

Starting up a small business changes you as a person; the fear of failure is all-consuming and never really subsides. When dealing with startups, banks must address them as people first; the business comes later.

Tide Bank: A Challenger Bank Perspective
George Bevis, Founder and Chief Executive, Tide Bank
Jacob Jegher, Senior Vice President, Banking and Head of Strategy, Javelin Strategy & Research

Tide Bank is digital-only and focused on the next generation of online banking. They are a new bank with no real model for their concept, but their goal is to help the small business owner run their business by eliminating the administrative/bookkeeping piece. Initially, Tide Bank experienced issues with access to capital and no brand awareness, however their model has proven popular with business owners, and they moved 10 percent to small business checking in 10 months by solving a problem for the business owner—not by trying to change banking!