Bankers want to be known for developing relationships, but are they doing enough? Are they providing the right tools and products that would best fit their customers’ needs? Knowing that these needs are specific is key, especially when it comes to a bank’s business customers.
Without the right products or tools, it is difficult for relationship bankers to truly do their job. Without real, focused solutions to customers’ problems, these bankers are commoditized.
Where should they start?
Bankers must build a product mix that addresses the specific needs of their service area. To ensure they know what their customers need, the first step bankers must take is to simply look at their demographics. It seems basic, but banks must first know who they serve and who makes up their community before they can begin implementing specific tools. If they skip this step, bankers could end up offering products or services that do not end up helping their business.
Bankers must take a step back and see what industries are prominent in their community. Is there a large farming or agricultural industry? Are they experiencing a new construction boom? Community businesses and the trends among them must be a key part of this strategy, as they have a significant impact on the economy. According to the U.S. Small Business Administration, small businesses make up nearly half of the GDP in the United States and, unfortunately, many of those small businesses do not have access to personalized banking tools.
At the same time, business banking is often one of the most fruitful and successful relationships a bank can build. Businesses are more likely to pay for financial services that help them run their business more efficiently, and banks are missing a huge opportunity by not providing customized lending and deposit strategies specific to their client industries.
This presents a prime opportunity for relationship bankers to step in and create personalized experiences for their local businesses. Once bankers identify their target industries, they can create a strategy to reach them, complete with the customized products and experiences they have been looking for.
According to Sageworks, small business lending is a $700 billion market that serves upwards of 29 million small business borrowers in the United States. Take the construction industry for example. This industry was responsible for $11.4 trillion in worldwide revenue in 2018; $1.2 trillion of that coming from the U.S. alone. This industry is colossal; however, it often lacks financial tools customized to the specific needs of builders and contractors specific to payments, deposits, moving money, etc.
Many banks may think they have what construction companies need simply because they offer construction loans, but they do not have the modern mobile tools necessary to create customized experiences for this unique industry. Many financial records are kept manually on spreadsheets, leaving room for error and no room for personalization. Going beyond generic business banking products by providing construction-industry-customized loan automation tools could help make the construction company’s job easier, as well as do the same for the bank.
Builders and general contractors make a tremendous number of payments to a host of subcontracting companies. Those sub-contractors have to pay their employees or contractors. Tracking invoices and payments and available funds can be a struggle for builders. Banks that have a mobile payments tool that works with their loan could help remove a lot of the friction when it comes to construction payments.
Not only can the bank leverage their relationship with the primary construction customer, but they can expand that relationship to additional relationships by providing the mobile-based tools required to compete. Banks can go after sub-contractor deposits and electronic payments generating new non-interest fee income.
The same example rings true for other industries like agriculture, maritime, professional services, hospitality, restaurants, and so on. Any business has unique needs and challenges they must overcome when it comes to managing their finances, and it is up to relationship bankers to spot those needs and meet them with targeted tools designed to address each industry’s specific needs.
What are the results?
By building a product mix that specifically targets the business culture of the bank’s service area, the institution creates a win-win situation. Of course, the small businesses are winning because they finally have access to personalized tools that make their jobs and lives easier. This customized experience is key for them. Everyone wants to feel special, even small businesses.
The bank wins for the very same reasons. Their job also becomes easier with the assistance of these tools that were made to deal with different industries and their specific challenges. Also, when these businesses feel recognized and valued by their bank, that relationship is strengthened. When this happens, the relationship banker has hit a home run.
It is crucial that relationship bankers are always on the lookout to improve with the right tools – not just so they can compete with other bankers, but so they can better serve their own customers. The true relationship bankers are not the ones who call themselves relationship bankers, but the ones who show it through a clear understanding of their customers along with customized products and services and thoughtful solutions to serve each of their customer types.
Matt Johnner is president and co-founder of BankLabs. The mission of BankLabs is to reimagine banking products of the future through community-oriented technologies that create new fee income, attract deposits, expand loan opportunities and differentiate the financial institution from competitors. BankLabs believes that community banking is a way of doing business, not a size, location or traditional definition. For more information, visit www.banklabs.com.