man looking at laptop and phone
Photo by Joshua Mayo on Unsplash

SMB personalization key to community bank, credit union growth

Community banks looking to increase their business should focus on better serving the needs of SMBs through the personalization of solutions.

Once those options are appropriately presented, it shows those institutions deeply understand their customers, Q2 head of product marketing Dean Jenkins said.

How the pandemic was a growth driver

The COVID-19 pandemic accelerated the digital shift that had previously been maybe a minor consideration for some banks, Jenkins began. Matters abruptly went from “maybe” to an absolute necessity overnight.

That delivered a significant opportunity for community banks and credit unions, he explained.

Technology readily available allowed them to attract new business and compete with larger rivals.

Gone are the days of selecting your bank because it’s nearby; now, small businesses want to bank with someone who understands them and has the digital products they are looking for.

“Now you’re starting to see the digital experience show up as the number one reason why a small- or medium-sized business would switch financial institutions,” Jenkins said. “It creates an opportunity for these community banks and credit unions to service these customers and to win more relationships within their target markets.

Dean Jenkins headshot
Dean Jenkins

“They can now compete through technology with some of the larger providers, and what we’re starting to see from some of our customers is that they are competing and winning against some of the larger financial institutions that have been pretty dominant, especially in small- or medium-sized business or into the commercial market.”

Laying the foundation for personalization

Jenkins said that the pandemic laid bare some unaddressed challenges and brought the urgency to act. Board members and the C-level began asking what their institutions were doing to acquire, onboard, and serve customers. Could they go beyond traditional banking functions and deliver added value by helping SMBs manage all financial aspects of their business?

Banks must become more consultative and relationship-based, Jenkins cautioned. They must seek to understand the customer through data analysis that suggests improvements to cash flow, collections, and other areas.

Walk into a meeting with actionable insights that show you clearly understand your customer and you’re on to something, Jenkins said. It deepens the relationship and, by actions, shows you’re looking out for them.

The three stages of how data will deliver increased personalization

Excellent data mining for actionable insights is still in its early days. Customers don’t need to understand that part; they just need to see the value delivered.

And there’s so much value to come, Jenkins said. The stage is being set, but three things need to happen. The first is aggregating multiple data points like transaction history and online behavior into one body. That can be challenging in a siloed organization.

The second phase is understanding the data and distilling it into its most valuable parts. It is easy to overwhelm with data to the point that it loses its meaning. The final point is action based on pattern recognition.

Jenkins explained that this evolution represents a significant breakthrough in the capabilities financial institutions can offer small businesses. Often they were limited to a retail offering that wanted business functionality or a complex business package that required a significant knowledge jump.

Bridging the gap between business and consumer offerings

Why not provide the best of both, where the customer can select what they need (upon working with the bank if necessary) and deliver it in a cohesive package?

“We’re creating architectures that allow you to mix and match different components from different capabilities, rather than just having a one-size-fits-all solution, which is important to small businesses,” Jenkins said, citing Q2 Catalyst as an example. “Now I can take parts of banking solutions, commercial banking, and retail banking and put it in a single view, which is what they’re looking for. 

“That is where it gets really interesting. As I bring the fintech solutions in, I start bringing solutions like accounting, expense management, and payroll packages. Now I can start integrating those into the experience. Instead of just being a banking platform, it becomes this financial experience platform with all the financial capabilities I need to run to run my business.”

There’s more, Jenkins added. The next step is to build industry-specific experiences so businesses in those verticals can be understood more deeply. Bank, meet your satisfied and loyal customers.

Also in the works are products addressing specific problems gig economy workers face. Implement these solutions successfully, and it’s a continuation of the mindset of clearly understanding your customer. They grow their business, and so do you.

“This is the opportunity that financial institutions have,” Jenkins concluded. “I can bring that together, put it in the context of your banking relationship with me, and now it all works together in a way that makes sense to you. That’s a really compelling value proposition to the market.”

See also:

  • Tony Zerucha

    Tony is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.