Rethinking Your Small Business Growth Strategy? Tips and Tools for Embracing Change - Fiserv

Rethinking Your Small Business Growth Strategy?
Tips and Tools for Embracing Change
Navigating the Journey in Warp Speed Digital Space

May 18, 2021 – Charlton Laird, Senior Strategist

Did your financial institution effectively support the needs of your small business clients
during the pandemic and are you prepared to meet future expectations with your
strategy? Quoting Captain Kirk from Star Trek, “To boldly go where no one has gone
before,” financial institutions are continuing with their core mission to grow and develop
new and existing business relationships, but are doing so in a universe that has been
upended into a digitally-integrated future. Small business owners and operators quickly
pivoted to available digital options to survive during the pandemic and forever changed
business operations and customer connections.

According to a recent Raddon Research Insights survey, approximately two out of five
small businesses with up to $10 million in annual sales applied for and were approved
for some amount of Payment Protection Program (PPP) funding in 2020. And three out
of four small businesses applying for PPP relied on their primary financial institution to
acquire this funding.

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Financial Institution Used for PPP Loan

Source: Raddon Research Insights

So far in 2021, according to the ABA Data Bank, small businesses have shown
continued demand for funding in the third round of the PPP. The clear opportunity
remains that small businesses are overwhelmingly looking first to their primary financial
institution to deliver financial solutions and support, not only for their immediate needs,
but also for their long-term success.

With new investments in integrated digital transactions, treasury management, loan
origination and client management, these commercial tools are being prioritized to make
processes easier both for the financial institution and the small business. As you look
back on lessons learned in 2020 to develop and execute your strategies for 2021 and
beyond, has your leadership team embraced the changing frontier?

Consider the following tips and tools:

Follow a Tactical Roadmap

Like retail consumers, small business owners are looking to their financial institution to
make banking easier. They want an Amazon-like experience and anytime access to
accounts to bank where they want, when they want using a mobile device. Small
business owners want to be empowered to apply and get approved for a loan or open a
new account without the hassle of a face-to-face meeting for every request – and many
financial institutions are already delivering.

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Source: Fiserv Digital Ecosystem Advantage

Regional and community financial Institutions need to be mindful that digital solutions
for small business banking and treasury management are typical offerings from larger
financial institution competitors. While trying to keep pace with the latest and the
greatest, and associated costs, for digital innovation seems daunting, having a tactical
roadmap provides a framework and pace for your digitization and automation strategy
that will safeguard you from losing out to the larger competitors. Along with directing its
small businesses to utilize digital channels for banking and communication, financial
institutions must adapt how they connect with small business owners to manage and
grow relationships.

Establish Dedicated Relationship Managers

According to the J.D. Power 2020 U.S. Small Business Banking Satisfaction Study,
small business banking customer satisfaction is significantly higher when a dedicated
relationship manager is assigned. The aphorism that “Relationships Matter” has proven
to be a competitive differentiator for financial institutions with small businesses in the
wake of the pandemic. From an analysis of PPP data by the Federal Reserve Bank of
New York, businesses that already had a lending relationship with a financial institution
were more likely to obtain a PPP loan from that financial institution.

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Leverage a CRM Solution

Financial institutions that have relied primarily on their employees to handhold and
manage the profitable business relationships should consider solutions that aggregate
data and optimize their valuable business development resources. Leveraging a
customer relationship management (CRM) solution can provide the financial institution
the ability to use all its various stakeholder resources to help anticipate and solve small
business needs and provide added value to every interaction. Without losing the
personalized human-to human interaction that has been the foundation of small
business relationships and with a 360-degree view of the small business, financial
institutions can be proactive and present valuable financial solutions targeted directly to
the anticipated need at the right time.

Engage a Data-Driven Market Strategy

As crucial as it is for financial institutions to advance their relationship and engagement
strategies with existing small business relationships, it is also just as imperative to
realize an understanding of your small business market, the size and industry mix,
growth opportunities and local competitive makeup, as well as recognize the internal
value your financial institution can provide the local small businesses owner.

Service Industry Market Mix

Source: Bank Intelligence Solutions

 Source: Bank Intelligence Solutions

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Using market and industry data analytics tools enable financial institutions to evaluate
local market opportunity, prioritize business development and growth tactics in their
markets, and identify business industries that have better acquisition opportunity.
Employing a data-driven market strategy for new business acquisition and growth will
improve efficiency and allow the financial institution to allocate limited resources
effectively.

NAICS Segmentation Analysis

Source: Bank Intelligence Solutions

Whatever stage your financial institution is at with your small business strategy, it is
important to recognize the velocity at which the pandemic has shifted the behavior of
small businesses toward digital engagement. Financial institutions are also being held
to a higher standard for products and services offered to small businesses. Identifying
the technology resources necessary to help develop and support your digital space
roadmap for long term growth and sustainability will keep your institution from being
outperformed (or inhaling space dust) by your competitors for the small business
opportunities in your markets. Set course and engage.

Contact us for more information.

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