Community banks have had a challenging year; it’s been unlike anything our nation has experienced in the past century. Small to medium-sized businesses (SMBs), which are among community banks’ bread and butter, have suffered record job losses and closures. Between the March 13 COVID-19 emergency declaration and mid-April, total private employment in the U.S. plummeted by over 15 percent — a record drop.
Challenges (and opportunities) for community banks
As community banks know all too well, their SMB clients were at the epicenter of the nation’s job losses. In fact, according to Small Business Administration data, the largest decline for businesses of any size was for employers with just 20 to 49 employees. These small businesses experienced a catastrophic 21.5 percent plunge in employment between March and April.
But the COVID-19 pandemic has created opportunities for community banks, as well. The second round of funding for the Paycheck Protection Program (PPP), for example, earmarked $60 billion for community banks to loan to businesses. This included $30 billion for banks with less than $10 billion in assets plus another $30 billion for banks with less than $50 billion in assets. The paperwork necessary for these loans has kept community banks’ business bankers exceptionally busy in recent months.
But amid the upheaval our nation has experienced since March, the fact remains that even in “normal” times, community banks face a unique set of challenges. They must find a way to compete with the bigger banks, which can often offer advantages like lower fees and higher rates of return.
On top of this, community banks also have to compete with the growing popularity of fintech. Indeed, research shows that, over the next five years, 30 percent of large banks’ revenue is expected to go toward new and improved digital platforms: online banking platforms, smartphone apps, and more.
A different value proposition
So, why would an SMB owner opt for a community bank when the big guys offer more high-tech bells and whistles and better pricing? That’s simple. Community banks have a secret weapon: They make it their business to know their customers.
But how can community banks take advantage of this key differentiator when bankers are being asked to do more with less? (Remember those stacks of PPP paperwork?) How can your business bankers find the time to gather and then share the personalized information that business owners crave, especially in this challenging economy?
Give your team a unique angle that will help them retain existing clients and appeal to new ones — a leg up on their competition at the big banks — by being advice-driven. And the key to making these personalized connections and recommendations is to take advantage of Industry Intelligence.
Industry Intelligence as differentiator
Industry Intelligence enables community banks to become more advisory to SMB owners. Offering things like cash flow and exit strategy advice is a good first step. But take it a step further. Industry Intelligence helps bankers learn about the business owner’s key suppliers, their top buyers, and even their toughest competitors, and how each of these factors impacts the SMB’s bottom line.
Armed with this insight, your bankers can offer highly customized advice to help SMB owners bridge the gap between their unique issues and the financial solutions your bank provides. And Vertical IQ makes it quick and easy to find that nexus between business challenge and banking solution.
Your business bankers can review the Vertical IQ Industry Profile on their client’s niche. In just minutes, they can read the “Quickview” on the Dashboard and the “How Firms Operate” chapter to understand the ins and outs of the client’s business. Then, take a moment to look over the “Industry Trends” and “Risks to Watch Out For” chapters to learn about the forces at play within that industry.
Using this knowledge, as well as the “Call Prep Questions” chapter, your business bankers can now have a highly customized discussion with an SMB owner about their company’s issues and opportunities, as well as how this impacts their personal financial situation. This in-depth understanding of the client’s industry allows your banker to offer tailored guidance — as well as identify cross-sell opportunities — based on a holistic understanding of their entire financial picture.
An ace in your pocket: Industry expertise
Community banks and their business bankers can also take the personalized experience to the next level by incorporating Industry Intelligence into their SMB communication processes. Vertical IQ makes it simple and fast.
Pick a niche.
Bankers can choose an industry niche to target (crop production or machine shops, for example), then focus their prospecting efforts there. Use the Vertical IQ Industry Profile to study up on the in’s and out’s of that industry and the tailored products or services your community bank brings to the table to address their needs.
Incorporate industry-specific content.
Industry Intelligence is all about focusing on the SMB owner — their challenges and opportunities — and then offering them a unique solution that's tailored to those needs. Speaking their language not only in meetings but also in your communication pieces instantly boosts your community bank’s credibility. Add industry-specific content into letters, emails, and newsletters to show you understand their industry.
By sharing industry-focused content with a prospect or client, your banker will add value and stay top-of-mind. Print a timely news article (found on each Industry Profile) and drop it in the mail with a note, or send it in a personalized email. Print a portion (or all) of the Industry Profile, staple a business card to it, and use it as a valuable leave-behind after a meeting.
Improve social media posts, website content, and more.
This also ties into speaking the language of the client or prospect, while moving beyond more traditional marketing mediums. Industry-focused online resources — like whitepapers, ebooks, and blog posts — can drive traffic to your website, generate leads, and make for great conversation pieces that will hopefully convert into a new business relationship. They are also great for social media promotions!
Win over SMB owners with advice informed by industry expertise
Banking is not one-size-fits-all. Some SMB owners will be drawn to the high-tech “goodies” offered by big banks. Those folks don’t care that their bank doesn’t know them by name; they just want the latest and greatest technology. There may not be much a community bank can do to pull that person away from the big guys.
But the fact is, just like with personal relationships, there truly is someone out there for everyone. And SMB owners who are willing to exchange being just an account number in order to get those high-tech services may not be your community bank’s ideal client anyway. You offer a different value proposition: personalized service.
When your business bankers integrate the Industry Intelligence from Vertical IQ into their relationship management processes and communications, they will naturally attract clients who place value on a personalized experience — people who want to know the professionals who are assisting and advising them, and want their banker to know them. And your bank will be able to offer those ideal clients customized, industry-specific guidance on how to maximize profits and protect their business from common challenges within their industry, aiding them in creating a bright future for their business.
Let’s get started! Contact us today for more information about Vertical IQ or for a demo!
Photo credit: Pexels, Oleg Magni