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

Vertical IQ Spotlight Sessions

Session Title: Bank Spotlight
Speakers: Todd Hollander (Union Bank) and Rob Myers (Wells Fargo)

Hollander and Myers shared some of the key trends and characteristics of working with small businesses with under $5M in revenue. They discussed the importance of technology in order to improve efficiencies and respond quickly to customers.

Hollander and Myers agreed that it’s imperative to give relationship managers (RMs) all the tools they need to be successful and build trust with their clients. They also talked about how personal relationships are still important and should support the technology in order to build trust. Industry specialization, the speakers noted, is the future of the RM’s role, and that’s how the RM can stay relevant.

Session Title: Inclusive Lending: How Square Capital’s Model Changes the Landscape for Small Business Financing
Speaker: Jackie Reses (Square)

Reses discussed micro-businesses and how they struggle with mainstream banking. Oftentimes, a small business only needs a few thousand dollars for a quick purchase. Typically, they would use their personal credit cards or friends/family to front the money. This amplifies the personal risks for business startups, which then create roadblocks when seeking access to credit. Seventy percent of small business owners don’t get the funding they need from banks and then local communities suffer.

Square, on the other hand, isn’t looking at the credit of the small business owner but at the business itself. They look at transactions and specific business to the customer to really get to know the client; they are placing bets where traditional banks don’t even look.

Reses said that Square has found these small business owners are actually very good risks. Their average loan size is $6,500, and loss rates are less than 4 percent with most paid back in a year.

Session Title: Fireside Chat: Products, Partnerships and Value-Added Services
Speakers: Adrian Grant (9spokes) and Nate Smith (Visa)

Speed is driving the payments space, said Grant and Smith. The future is everyone getting paid in minutes/near-real-time, rather than in days. They shared some top trends they are seeing in the small business payments world including:

  • An increase in cross-border payments
  • Payments through other channels
  • Two-thirds of small business owners plan to have a digital transformation strategy with integrated payment processes in place
  • A massive uptick in women-owned businesses (73 percent of women business owners say they have trouble getting loans, so Visa came up with a specialized strategy for women called “She’s Next.”)

Grant and Smith advised that when choosing a tech partner, small business owners should always ask, “Does it differentiate me?”

Session Title: Adapting to the Modern Customer
Speaker: Mary Makfinsky (HSBC)

Makfinsky explained what customers say is important to them in their banking relationship:

  • Treat me like you know me
  • Make it easy for me
  • Earn and keep my trust

Bankers need to know their customers’ industries and what’s going on in their marketplace. Makfinsky noted that bankers need to show small business owners that they are actively listening to them and then offer them useful advice about their banking needs.

Session Title: How’d You Get So Big So Fast?
Speaker: Kala Gibson (Fifth Third)

A huge majority of businesses in the United States are small businesses. But instead of offering dedicated services to these businesses, Kala noted that most banks “dumb-down” their commercial products and try to re-use them in the small business space.

Fifth Third lets their customers self-assess what products and channels they use, instead of forcing a commercial or retail product down their throat.

Session Title: Small Business Banking: Lessons from the Best
Speakers: Jay DesMarteau (TD), Lina Munoz (Chase), Richard Schnapper (Capital One), and Michael Wamsganz (Huntington National)

The theme of this session was:

  • Know your customer
  • Be viewed as an advisor
  • Take a team approach for solving client needs (quarterback the client to the right resources at the bank)
  • Banks need to have a disciplined customer contact strategy

Fifty percent of small business owners say they have a relationship manager from their bank, and those customers are more satisfied than those who feel they have no banker assigned to them. DesMarteau from TD explained it as knowing the client’s value and potential and determining if that client deserves an RM.

Session Title: Creating a Competitive Advantage with Relationship-Based Digital Lending
Speakers: Susan Simper (MidFirst) and Dan O’Malley (Numerated)

Simper and O’Malley noted that banks must market smartly to those industries that have the greatest potential to use multiple bank products and to get approved for a loan — industries that have the highest likelihood of fitting into the bank’s credit portfolio.

O’Malley said that Numerated gives bankers the confidence to have a lending conversation to sell loans and grow relationships by effectively doing a credit analysis on the business before they even ask for a loan or provide loan documentation. Over half of the loans Numerated does are done over the phone or using technology.

Session Title: What Banks Can Learn from Best-in-Class Content Marketing
Speakers: Stu Richards (Bredin), Brenda Moring (BMO Harris), Rowena Li (Gusto), Samantha Twardowski (Microsoft), and Mallory Russell (Square)

When creating content, this panel recommended creating topics that address small business owners’ pain points and then sharing the bank product capabilities to address that issue. Solution-focused blog posts, tip sheets, and checklists make for useful, actionable content. This kind of relatable information will build both awareness and trust.

Session Title: Lending to Capture Small Business Deposits
Speakers: Eric Feldstein (M&T), Tom Doherty (CIBC US), and Scott Witter (City National)

These three banks explained how they are effectively getting small business deposits.

  • At Fifth Third, relationship managers and branch managers have shared business banking goals. As a result, there is no tension because if one wins, the whole team wins.
  • CIBC does not have a large branch network, which forces them to specialize in certain industries. They are driven by loans, but treasury management specialists work with the relationship managers to capture deposits through remote deposit capture and bundling treasury management products.
  • City National takes a different approach. They require the small business’s deposit/operating account be held at the bank in order to get a loan.

If you are interested in learning more about the event, or for access to some of the presentations, contact us.

Covering over 500 industries, Vertical IQ can help with many of the opportunities discussed by the conference speakers. Learn more about how Vertical IQ can be used to make bankers’ call preparation simpler and provide the compelling industry insights needed to enhance customer relationships.