What Small Businesses Want From Banks And Credit Unions

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Banking Kismet did a good job of taking one credit union to task for ineffective marketing to businesses. The crux of George’s argument was that the attributes that the credit union was using to differentiate itself, and to establish its superiority over large banks, weren’t truly differentiating factors.

While Banking Kismet was referring to just one CU, I think we can all agree that this CU’s approach isn’t unique. [For a great discussion on this, see The Financial Brand’s Service is not what differentiates you].

But while Banking Kismet’s analysis is spot on, it didn’t address the question: So what would differentiate the credit union in the minds of small businesses? Put another way: What are small businesses looking for when choosing a bank or credit union?

I haven’t written about this topic before, because I thought everybody knew the answer already. Apparently not. It comes down to three things:

  1. Are you going to lend me money or not?
  2. Do you understand my business and can you help me grow my business?
  3. Do you provide technology to make banking more convenient?

That’s it. END OF STORY.

Crowing about “personalized service” is useless. Finding out that you don’t know my business well enough to help me is no better coming from someone who knows my name than it is from someone who doesn’t know my name.

And if you’re not inclined to lend me money, then your volunteer board of directors only does me good if one of them is my cousin or next-door neighbor.

Not every small business puts equal importance across the three factors (the list comes from a report recently published by Aite Group on small business banking). But you’ll reach a pretty large percentage of small businesses if you meet all three criteria.

Of course, that’s a lot easier said than done. You’ll need underwriting capabilities to determine the best risks from the poor lending risks. And you might want to figure out which types of businesses you want to develop a knowledge of, and competency in helping. Oh, and you might want to invest in technology capabilities like mobile banking, remote deposit capture, and electronic invoicing.

Or you could just beat your chest, scream about your personalized service, and hope for the best.

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