At the risk of sounding like a broken record, let me assert that Small and Medium Sized Businesses (SMBs) represent a community bank’s most valuable customers. They generate a significant portion of your non-fee income, are a source for multiple types of loans and generally are a key component of the health of the local economy. You are way more likely to have opportunities to bank an SMB than a large factory or a Fortune 1000 company. This makes your ability to successfully attract and keep an SMB account of paramount importance. A recent article in the Financial Brand augmented my thinking on the importance of SMB customers – read full article here. It highlighted the efforts of the big banks to focus on acquiring SMB accounts. The key take away was that community banks still have the opportunity to cement their relationship and keep those SMBs but only if they take specific action to tailor their service to meet the unique needs of an SMB. Let’s examine some of the elements that would specifically be attractive for an SMB: Real-time notifications on account balances / insufficient funds activity Ability to gain immediate access to their banker Daily or intra-day updates on business account activity Integration with the common SMB accounting systems Availability of Instant Payments and Request for Pay (RFP) The above list is by no means comprehensive, but it’s a good start to understand how a community bank could take specific and reasonable measures to become dominant with SMBs in their market(s). According to the article, these elements have been overlooked by large FIs SMB service offerings. This gap should enable a smaller institution to gain market share, but it will take a coordinated and strategic effort to ensure that all of the elements listed above are available from the community bank. Let’s explore each of these in more detail. Real-time notifications on account balances / insufficient funds activity – Every account holder should have the ability to setup an alert that would trigger a notification if their balance goes below a preset threshold. This is basic and simple, but I suspect that FIs are not going to the effort to encourage or train the SMB to enable it. You should also offer an alert to denote any debits that post over a preset threshold. The combination of these two alerts gives SMBs quick and easy access to information enabling them to pay attention to account activity and remediate any potential overdraft or unauthorized transaction issues. Ability to gain immediate access to their banker – It figures that the larger the financial institution, the more difficult it is to access a banker. As a community bank, you can certainly make sure that all SMBs have a direct or mobile number for their banking officer. Yet, there may be other ways that you could up the ante on bank officer access. One idea I particularly like is offering the ability to allow an SMB to signal to the bank that if their bank officer is “in the area”, they would like for them to stop by. This can be an option offered within online/mobile banking. What would happen is the system would recognize the business location and if their banker should come within a certain distance from that location (say within 2 miles), it would notify the banker that their customer wants them to stop by. This enables the banker to plan out regular visits to meet with customers or can stop by a business if they happen to be “in the area”. Daily or intra-day updates on business account activity – Again, this seems so simple. Generate an email or text that shows the account balance and a summary of transactions for that day. This could occur multiple times each day or just mid-day depending on the SMB preferences. Integration with the common SMB accounting systems – Most SMBs use one of the commercially available systems for tracking business activity, accounting, billing and reporting. Systems like Quickbooks, Freshbooks, Xero and others are off the shelf software applications that most SMBs use. Most FIs have the option to integrate in some fashion between these systems and their online banking platform; however, the effort to educate the SMB and effect the interface is often not done proactively. Yet, this one element can create a tight bond between the SMB and the bank. Availability of Instant Payments and Request for Pay – Instant payment services such as FedNow and RTP can enable a business to take advantage of a Request for Pay (RFP) feature. This results in an electronic message delivered to a customer requesting payment. Think a plumber that just completed a repair job and is settling up with the homeowner. The ability to receive a response to an RFP representing a payment is not only an incredibly efficient mechanism to bill and collect but also provides immediate credit to the SMB. For every SMB, cash flow is the most important day by day financial responsibility. SMBs are the lifeblood of your local communities, and they are critically important to the community bank as a source of loans and non-interest fee income. Perhaps you already have some of the elements described above but have not made them a focus of your SMB marketing efforts. None of the elements you may be missing would require any significant investment to obtain. What is needed is for your institution to decide that attracting and retaining SMB accounts is strategically important and then following through on a sustained effort to make SMB accounts a key component of your sales and marketing efforts. If you have questions or comments on how you can increase your success rate with SMBs, reach out to me at dpeterson@bankers-bank.com. I would love the opportunity to collaborate with you on tips, tools and most importantly, advocacy in any way that would be deemed to be advantageous for your financial institutions long term success. The opinions voiced in this material are for general information only and are not intended to provide specific advice, recommendations, or endorsements. No representation is being made as to the material’s accuracy and completeness. Past performance or references are not indicative of future results.