What’s the key to building profitable small business relationships in banking? Ask your data

Written by Milind Pathak Senior Director, Product Management, North America, Core Banking Platforms and Integration
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In a word, the nature of business today is small. In fact, ninety-nine percent of commercial enterprises employ fewer than 500 people. Even more eye opening, eighty-nine percent of these have less than 20 employees.i

While small businesses are running the country, financial institutions continue to align their banking operations to the needs of large corporations or try to service Small and Medium-Sized Businesses (SMBs) from retail platforms that lack the functionality they need. This includes digital access to traditional banking products as well as new offerings that could streamline business operations while delivering added profitability to the financial institution.

For example, the majority of small- to mid-sized business leaders are assuming more responsibility for financial management since the start of the COVID-19 pandemic. According to a recent survey, over seventy-five percent of small business respondents said that they regularly take on accounting functions.ii

Seeing to these duties comes with a cost as leaders spend less time on mission critical tasks, such as operations, sales, marketing and business development. A banking partner that could ease some of this burden by offering related products stands to grab a bigger piece of the approximate $6 trillion of GDP represented by SMBs.iii However, many banks aren’t ready to do so.

By way of example, forty-five percent of SMBs received no outreach from their bank during the COVID-19 pandemic.iv That means no inquiries to see how the business was doing, no offers of support and no information on funding. In short, banks and credit unions missed a prime opportunity to grow relationships and even expand into new products and services by failing to understand SMB needs and act appropriately.

In most cases, siloed banking data is to blame, making it difficult for financial institutions to harness actionable insights that could identify SMB needs and help to outline a plan of action. Fortunately, emerging technology is making it easier than ever for banks and credit unions to access the insights locked inside their own stores of data and to better serve small- and mid-sized businesses.

Narrowing in on Data Insights

After decades of transactions and serving customers, traditional financial institutions have a vast quantity of consumer and transactional data that could be used to identify trends and isolate customer needs. The trick is making sense of the reams of information to narrow in on relevant insights.

For financial institutions, the problem of sorting the relevant data from the irrelevant and pinpointing insightful developments is hampered by banking operations. Core systems live in siloes, holding data captive within individual banking applications.

This makes it difficult to gain a complete view of the customer. As a result, many banks and credit unions have failed to serve SMBs in an efficient manner. For example, SMBs are consumers at heart and often want access to commercial and consumer accounts from a single portal to simplify financial management.

An inconsistent view of the customer across products and channels also hampers efforts to understand customer trends and needs. Without this complete visibility, financial institutions miss the chance to identify revenue generating opportunities or instances when outreach could strengthen relationships.

The first step then is to connect the data from disparate systems and processes into a single stream. From there, financial institutions can apply analytics to identify patterns and reveal insights into SMB behavior.

B1 Bank out of Baton Rouge, Louisiana, has done just that. The financial institution recently began using Fusion Analytics by Finastra to establish customer profiles based on lifestyle stages and habits. Using the granular details gained through this strategy, B1 Bank was able to send pre-screened offers only to those customers most likely to respond to the product offer.

Using analytics, a similar approach could also inspire more profitable marketing to SMBs, but targeted information like this does more than inform outreach efforts. It makes it possible to design better fitting products and to even predict what customers will need in years to come.

Analytics and Automation, Achieving the Competitive Edge

Once financial institutions have analytics in place and understand what SMBs need, it’s important to act on those insights

Automation makes it possible to streamline ordinary business tasks related to financial management, such as bill payments, cash management and trade and supply chain finance. By offering products that automate processes like these, banks and credit unions build stronger SMB relationships but also gain the opportunity to improve internal operations by breaking down silos and becoming a connected financial institution. The result is a 360-degree view of each and every SMB customer.

This expanded view, when combined with the deeper pool of information gained as SMBs adopt automated services, provides ever deeper insights. Suddenly, the bank or credit union can rapidly isolate particulars, such as the size of a business wallet and where opportunities lie to expand the bank’s share, the health of a business and its future viability, and even the chance to determine how likely an SMB is to switch to a new bank or credit union.

In turn, financial institutions are able to focus on valued relationships, taking action to build long-term associations with profitable businesses while also identifying opportunities to assist struggling enterprises.

Supporting the community is what commercial banking is all about, and analytics are the key to building SMB relationships that last.

i “Facts & Data on Small Business and Entrepreneurship.” Small Business & Entrepreneurship Council.” Retrieved from

ii “Survey: What Small Businesses Want from Banking Services.” BlueVine, Aug. 27, 2020. Web.

iii Leonardo Mattiazzi. “Banks Can’t Afford Not to Support Today’s Small and Mid-Sized Businesses.” Global Banking & Finance Review. Retrieved from

iv Jim Marous. “The Banking Industry’s Critical Role in Saving Small Businesses.” The Financial Brand, Aug. 3, 2020. Web.

Written by
Milind Pathak

Milind Pathak

Senior Director, Product Management, North America, Core Banking Platforms and Integration

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