4 Foolproof Digital Strategies to Grow SMB Banking Accounts

To retain small business banking customers — and add more — banks and credit unions must carefully prioritize the technologies they need — especially if they're running on tight budgets. Bankers and other experts identify the must-have solutions.
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Imagine if buying banking technology meant going to a department store, where all the digital solutions were hung up on racks.

A metaverse display to your right, CRMs and CDPs to your left, and artificial intelligence and the ‘Web 3.0’ that everyone keeps talking about on level two, along with a swath of other technologies you’ve never heard of.

Meanwhile, store associates keep popping up to describe the thousand sub options available to you. How do you choose from that overwhelming plethora of options?

And how do you know where to spend your budget? The cash earmarked for bank technology investments is probably constrained, with financial institutions battening down the budget hatches for the upcoming year. Bankers must prioritize what they’ll include in their technology budget, what they’ll ditch, or what they’ll have to wait for until next year.

There is never one method for success, which is why advisory firm Aite Novarica moderated a panel with experts from BECU, Texas Security Bank, TD Bank and digital banking provider Q2.

The two banks and the credit union range widely in size, but like all financial institutions they have one central goal for their small business customers: make them happy and offer them the tools they need to succeed. But each institution must approach the goal with different solutions.

For instance, access to minimal monetary resources means institutions like BECU and Texas Security must cue in closely and prioritize the solutions they’ll invest in first. On the other hand, large institutions like TD Bank can afford to apportion resources for more expansive and expensive technologies.

Aite’s Christine Barry, Head of Banking and Payments Insights, broke down the panelists’ points to ‘five digital imperatives’. The Financial Brand editorial team consolidated the first and last ‘digital imperatives’ into one section.

  • Aggregate and analyze personalized data
  • Build out self-service technologies for small and midsize businesses
  • Digital bank onboarding
  • Lean on the bank-fintech partnerships
  • Create tailored banking customer experiences to match

1. Personalized Bank Data Is Key In Winning Over Customers

To keep customers interested, Aite stresses, remember one word: Personalization, personalization, personalization. Almost half of business owners (48%) emphasize a personalized banking experience is very important or required to keeping their business.

It’s a smart move. Nearly a third of business owners whom Aite polled ahead of the webinar said they likely or will definitely consider switching banking providers over the next two years.

Personalized data is critical for keeping customers — retail or commercial — engaged.

Though tech companies make it sound so uncomplicated, gathering and analyzing client data far from easy.

For years, banking data was relegated exclusively to back-office teams, who provided rudimentary customer profiles to front-office financial marketers and sales teams.

“The front office teams understand now what are the opportunities for them: to change, to tweak, to add to the opportunity that will improve that ROI says Dean Jenkins, VP of Product Marketing Product Management at Q2. “It’s really about crunching the analytics, making that available.”

Learn More: Consumers Expect Personalization at Every Banking Touchpoint

Even the big banks are still learning how to build comprehensive customer profiles and aggregate data better. Jo Jagdish, EVP and Head of Corporate Products, Services & Innovation at TD Bank, says a unified platform — essentially a dashboard of tools that can be tailored to the business owner’s needs — has integrated their technology into their personalization processes, which has been crucial to the relationship between TD and its business customers.

“We’ve benefitted from being on this unified platform that is driving more sales agility as well as coaching to relationship managers,” she says. “We are leveraging the data and predictive analytics that exists in these tools.”

A major component of building the consolidated platform for clients, as she explains, is ensuring client data lives in one place, not five, and is used to build business customer profiles within the dashboard. That’s still a work in progress.

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2. Offer Self-Service Tools For Small Business Customers

The capabilities Jagdish describes illustrate what smaller banks and credit unions hear every day: big banks are innovating faster and building out impressive solutions regional and community institutions struggle to compete with.

“We hear from our members that they’ve seen it done easier at some of the larger financial institutions. We want to keep up,” says Dana Gray, SVP of Commercial and Business Services at BECU.

Learn More: How Community Banks Can Compete With Fintechs & Megabanks

BECU — a $30 billion credit union serving over 700,000 business-owner members in Washington, Oregon and Idaho — is only just embarking on its digital transformation journey. Its innovation and marketing teams can’t always build, or buy, systems like TD’s.

Instead, Gray focuses on self-service tools.

“Small businesses are busy, they just cannot work on our time frames, they have got to work on their own,” she says. “We’ve got to provide access to banking services when [members] need them.”

Key to Success:

Small businesses want more self-service tools so they can conduct banking activities on their own time.

That tracks with Shon Cass’ experience. The EVP and Chief Experience Officer at Texas Security Bank, Cass says his $1.1 billion bank is new to the digital banking game and its margins are compressed — especially coming up on the 2023 budget season — which will disrupt technology investments. On the other hand, supporting small businesses with specific technology benefits the bank.

“When we create efficiency for the customer, we create an opportunity for them to move at their speed and on their timeframe,” Cass says, “but we can’t forget about the efficiencies that it creates also at the bank.”

3. Digitize Bank Onboarding Processes

Every financial institution is working on how to better onboard customers digitally, Barry says, and for good reason. A Bank of America survey found more than four out of five (85%) of its own small business customers are relying more heavily on digital channels. Onboarding here refers to both opening accounts completely digitally, and also the digital follow-up that occurs after an account is opened.

The problem is that few banks are very good at integrating digital solutions.

Bankers themselves acknowledge there’s work to be done. Ahead of the webinar, Aite polled bankers at the top 150 banks in the U.S., who largely said their digital onboarding processes are not at all efficient, or not where they should be.

Read More: How Banks Should Fix Their Poor Digital Onboarding Experience

“There’s plenty of room for enhancement to improve automation transparency. We’re seeing institutions focusing more on dashboards, so that customers are more aware of the process,” Barry says, “trying to improve the length of time that it takes, eliminating some of those paper offerings.”

Part of the problem is a lack of in-branch experience with business owners and their more complex needs, Gray says, as most bankers spend far more time working with retail customers and are therefore far more comfortable in the consumer space.

Discrepancy in the Process:

Branch bankers spend more time with consumers than with business customers. This can create a knowledge disconnect, which digital onboarding tools can fix.

BECU is trying to reduce variability in that experience by building out digital onboarding technologies, Gray says, but Jenkins warned that it’s not as always as easy as a plug-and-go. Though many banks are fixated on speed and efficiency in automating the onboarding process, his team is always thinking about avoiding a broken process.

“Be cautious of looking at your existing processes and just purely automating those,” Jenkins says, “because you’ll have the same inefficiencies show up in your digital solution.”

4. Build Bank-Fintech Partnerships

Most business owners would prefer to have their banking all in one place — but three out of five of them bypass their own bank or credit union and enlist fintechs and nonbank providers to ‘fill the gaps’ in their financial service experience. Among Millennials business owners, this number is even higher, Aite’s Barry says.

Financial institutions have outsourced their technology needs for years — even if it was on a small scale, Barry says. Yet, the dynamic has changed.

“It’s not just fintech and financial institution partnerships anymore,” says Jenkins. “It’s fintech and fintech and financial institution working together to deliver these capabilities faster and more innovative.” Most of the bank technology companies, for example, now facilitate connecting financial institution clients with specialized fintech providers.

Even for TD Bank, assembling a collection of fintechs to bridge technology gaps is pivotal, says Jagdish. Indeed, when it takes too long to build out a system (or build a system that will eliminate customer pain points), TD’s innovation teams turn to fintech providers.

Texas Security Bank is on the same course — and if a bank like TD can’t afford to build everything in-house, Cass says, neither can institutions like his. He acknowledges that willingness to partner with fintechs didn’t exist for years. Yet he also points out that a bank that wants to stay afloat can’t afford to hesitate to join forces with fintech providers.

“Our clients are looking for that technology,” Cass says.

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