They say numbers never lie. I am going to challenge that, at least in this blog. We ended 2017 with data that indicated a shift: smaller community banks (those under $10 billion) were outperformed by their larger competitors when it came to small business lending. Looking back, I think the biggest difference was the adoption of FinTech capabilities by those larger banks and with the openness of their channels to attract and grow their platforms. So how are the smaller banks responding? And most importantly how can we change that trend?
I had the privilege of presenting with Elizabeth Crawford, of Emprise Bank, at Baker Hill’s recent Prosper 2018 and I was amazed at how Emprise is adjusting their strategy and approach. Based on their example, I would say that we are about to see the shift go back in favor of the small business bank. If you missed my session with Elizabeth, here are three major takeaways you need to consider:
First, always have the customer in mind and know what they value most. Emprise has a strong legacy of local decisioning and being a hometown lender. That is an amazing value proposition to some borrowers; however, to others that means nothing. Emprise has invested thousands of hours to be able to understand the voice of the client and to understand exactly what the clients are wanting. One of the biggest challenges Emprise took on was not acting like a bank. Crawford’s advice was simple, “Stop thinking, speaking, and acting like a bank; meet customer needs in a way that makes sense to them.”
Second, challenge and change the culture of your FI with new thoughts and new talent if needed. Emprise did this in a big way – with a new key strategist who has a digital focus and has the responsibility to make sure the digital landscape results in client engagement, especially when it comes to pushing out loan applications to the small business borrower. So who is that person in your institution who is driving the view of the digital landscape? If you cannot answer that, you need to decide who can do that! You need to be asking yourself in every client interaction why they come to the branches versus a digital experience, and what could you do differently.
Last, be willing to learn and discover throughout the FinTech strategy process. Not everything is going to work the first time out of the gate. That is fine. Crawford shared a story about how Emprise launched a very successful customer-facing solution, but later found that the backend side of the equation was not working as they wanted. So, things pivoted, and changes were made that helped all the parties involved.
So take a bold digital footstep, and own the small business market!