Businesses are comprised of people: their desires, their hopes, their fears. To overlook this fact is to overlook one of the most fundamental aspects of business itself. And yet, amid all the noise and distractions of managing a financial institution, this essential human aspect is too often treated as an afterthought.
We see it happen all the time: a client feels that they are not being prioritized, or that their needs are not being properly met. Eventually, they feel alienated from the very institution that should be making their business and their life easier. However, business owners have more options now than ever before, and when push comes to shove, switching is as simple as downloading a new app.
They find an alternate service and never look back. So, what can we, as financial institution leaders, do? Make it personal.
Make business personal.
Small businesses are inextricably and irrevocably personal. They are created and managed through the blood, sweat and tears of their owners. Their business is their livelihood.
Financial institutions should see themselves as advisors, as guides, and stewards. Here’s how financial institutions can refocus and redefine relationship banking for the needs of today’s business owners.
Be As Nimble as Your Customers
Small businesses are also resilient and flexible in the face of adversity. They need to be, as a means of survival. If we look at the rapid digitalization of small businesses in response to Covid-19, this is markedly clear. Their quick adoption of new technology to meet the needs of their business in a time of such uncertainty has been truly remarkable.
Quite frankly, this is the sort of flexibility that financial institutions must adopt as we continue moving forward into an increasingly digital society— an agile growth mindset. A daring willingness to try new methods, to see our work as scientists, and if you fail, fail fast. It’s where our clients are already at, and we need to be right there with them along the way.
Center on Your Customers’ Experience
This transformation begins with reimaging how we institute change within our organizations. We need to be open to receiving objective outside input. It is no longer enough to only look internally toward business leaders to help us with the process. Time after time, the issues are simply repackaged rather than resolved.
Once again, this is where putting the client at the center of the process is paramount. The client’s experience is key to identifying when issues arise, and so it is their experience that should be documented and utilized in the solution process. If we don’t know our clients, how are we to know what issues they face? Talk to your clients, listen to their feedback. Ask questions about their goals and aspirations. Get to really know them.
Food for Thought:
Showing a curiosity and a desire to understand your customer will build confidence in your brand and differentiate you from the competition.
For instance, small business owners often express frustration when it comes to handling finances — it’s a burden that prevents their full attention from being placed on running and growing their business.
Banks and financial institutions have the data to help clients, but often fail to do so. During Covid-19, small businesses expressed the desire to be evaluated on an individual basis, using nontraditional metrics that go beyond what just makes sense on paper. In fact, per a 2020 report by Deloitte, 62% of small businesses were most interested in access to financial advice.
This is a missed opportunity to get personal and to serve small businesses in a more customized way. Leveraging data as a tool to help clients make informed business decisions is a solid approach to strengthen your relationship with your core consumer.
Reframe Your Partnership Strategy
Another valuable opportunity is to consider fintechs as collaborators, not competition. Working together to restructure and modernize your services capitalizes on the specific skill set of fintech vendors—making financial services more accessible—and allows you to invest more time and effort into putting the client at the forefront. Fintechs are there to help service those vertical niches. They are the WHO to our HOW.
For example, a primary concern about the digitalization of finance is the loss of face-to-face connection between customers and their financial institutions. It’s harder to be a relationship banker when your clients are interacting with you solely through the digital space. An Accenture report states that at the end of 2020, 50% of consumers interacted with their bank or credit union through mobile apps or websites at least once a week, up from 32% in 2018.
An Industry Challenge:
One out of every two customers interact with their banking provider via a mobile app, which makes it harder to be personal, but also all the more important to humanize the experience.
Completing transactions through a web portal is inherently impersonal, and many banks’ existing online services are both outdated and cumbersome. Fintech vendors, who tend to offer easy-to-use, highly streamlined digital financial services, benefit from this upward trend. Upon noticing this, among banks and credit unions planning to partner with fintechs, 86% cited “improve the customer experience” as a top priority, according to Forbes.
By developing narrowly targeted, but very effective solutions, fintechs have managed to enter and dominate segments that have been largely overlooked by traditional banks (loans for consumers with no or poor credit, personal finance management tools, etc.)
Even incumbent banking titans are feeling the growing presence of fintechs. In an April 2021 annual shareholder letter, Jamie Dimon, JPMorgan Chase chairman and CEO, claimed that fintechs are one of the “enormous competitive threats” to banks and credit unions, largely as a result of legacy financial institutions’ inflexibility. Rather than a loss, however, there lies an opportunity for mutual benefit. Fintech partnerships will be indispensable in offering a variety of niche services that fit the modern dynamic needs of consumers.
The New Relationship Banker
There are profound societal changes taking place, and the world of finance simply must keep pace. What doesn’t change, however — as James Robert Lay, CEO of The Digital Growth Institute, points out — is the fact that business owners are still looking for two things: help and hope. That is where we add value. We can humanize the digital experience, and truly magnify the moments that matter by providing our services.
Be flexible and be willing to listen. Look for ways to be daring, different, and smart so that you can meet the client where, when, and how they want to be met.