“It’s like the question, ‘Do you prefer your toothbrush or your dentist?’,” prompted Rob Pascal, Small Business Strategy and Planning executive for Bank of America Small Business. “We’d be stuck without the toothbrush, but when we really need the advice, we need the dentist.”

A prevailing view among small business segment leaders and small business owners (SBOs) themselves (according to research from Barlow Research Associates and J.D. Power, shared at the 2018 Small Business Banking Conference) is that banks can be and should be sources of advice. Yet J.D. Power’s research indicates that banks continue to fall short of this expectation. According to the firm’s latest U.S. Small Business Banking Satisfaction Study:

  • Only 37 percent of small business operators feel their bank appreciates their business.
  • Only 32 percent think their bank understands their business.
  • Only 23 percent say their institution anticipates their banking needs.

These statistics should disquiet every banking industry senior leader in an environment where there is increasing emphasis on personalization, one of three key themes from the 2018 conference:

Personalization – There were two broad sub-themes. First, we’re largely beyond the point at which banks and credit unions can or should compete on product or price. Today, the best way to differentiate a brand is through hyper-personalized financial recommendations and client experience, a critical leading indicator of future revenue. Second, building from the J.D. Power findings, clients want digital AND personal attention. In his talk, “Bankers or Bots?,” Brent Reinhard from JPM Chase said, “SBOs want advice when they need it and self-service when it makes sense.” Sharing Barlow Research Associates’ statistics, Reinhard noted that greater than 50 percent of SBOs prefer to engage in person with a banker or at a branch to resolve an error, apply or enroll in a product or service, or find answers to general questions.

Partnerships – In recent conferences, the word “partnership” has been most frequently paired with discussion of fintech lending in discussions of collaborations between banks and fintech lending software providers and funding platforms. This year, the partnership discussion broadened to include internal “utilities” and payments.

“Partners are critically important,” noted Jay Desmarteau, SVP and head of Regional Commercial Bank Specialty Segments at TD Bank. “There are things that banks can’t do on their own. For example, Precision Lender gives us information about the rest of the market…” Added David Hiller from SunTrust, “A lot of the value that banks provide is the integration of internal and external capabilities.”

From her perspective at Mastercard, Ginger Siegel concluded, “Financial institutions and small business customers still have a myriad of needs and challenges …. The rapidly increasing number of fintech players in the payments ecosystem offers opportunities for fintech partnerships to meet these needs, fill capability gaps, and drive innovation.”

Payments – While this discussion overlapped significantly with the partnership discussion, three points stood out:

  • Banks have been losing share in the payments space. For example, bill pay has become increasingly digital, but financial institutions are losing share in this rapidly growing market with some merchants cutting out intermediaries. Bank share has dropped from 38 percent in 2010 to 26 percent in 2017.
  • Merchant entry into the payment space, e.g., the Amazon-American Express partnership, further threatens the banking industry. Bain research, released September 2018, indicated that 65 percent of Amazon Prime members would use an Amazon bank account.
  • Banks can retain or acquire new clients through partnerships with non-financial companies (e.g., RBC’s “cents off per liter” partnership with Petro-Canada that generated seven times more new RBC credit card customers than any other RBC card promotion).

One of the most interesting statistics shared at the conference – Square’s $31 billion market capitalization (after 9 years in business) is greater than the market caps of banks including SunTrust, M&T, KeyBank, and Regions Bank, all of whose founding dates are more than 100 years ago.

Two other themes emerged from conference presentations:

Portability – the increasing expectation of and reliance on mobile technology that allows business owners to check balances, receive payments, move money, and pay bills from their phones.

Profitability – using data to better manage loan portfolios and shifting the balance away from field-based sales representatives and toward centrally-based sales and support teams.

The foundation under all of these themes is “strategy” – a clear view of target customer segments, their needs, and delivery strategies that are broader than any particular bank’s home-grown products and that generate high levels of satisfaction with the customer experience.


Nick Miller
Small Business Banking Conference Chairman
Vertical IQ Co-Founder
President, Clarity Advantage

Nick Miller helps commercial banks and credit unions generate more profitable relationships, faster, with small and medium-sized companies, their owners, and employees.

He works with branch, field sales, and call center sales team members focusing on sales strategy, client acquisition, relationship development, and retention through sales process and sales execution, positioning, and expertise.

Nick has consulted with community, regional, and money center banks in the US, Canada, and Mexico on sales strategy implementation, value propositions, sales process, customer experience, and staff development. He has MC’d Source Media’s Small Business Banking Conference for seven years. His “Weekly Sales Thought” column circulates globally and his articles have been published or quoted in journals including ababankmarketing.com, BAI Banking Strategies, Sales & Marketing Management, Commercial Lending Review, The RMA Journal, and American Banker. See his videos and articles at Clarity’s web site, www.clarityadvantage.com.