These days, all eyes are on small businesses, and for good reason. Small businesses have created the majority of new jobs over the last decade, and in past downturns, it’s been small business growth that often lifts the economy out of recession. Small business customers are often caught between the retail and large corporate customers of the global banks – creating an opportunity that regional and community financial institutions.
The ability of small businesses to finance growth, in turn, largely depends on the capacity of regional and community banks to lend them money. Although small and midsize banks ($10 billion or less in assets) control only a small minority of all bank assets, they account for the majority of small business lending. According to the 2015 Small Business Credit Survey conducted by the Federal Reserve, traditional bank lending continues to be the primary source of financing for small businesses.
As financial institutions seek to grow and retain small business customers, the packaging of services and rewarding behaviors can become the critical strategy for success. Rewards for behavior can include special interest rates or the waiving of fees. These incentives can form the basis for a series of small business packages that encourage a deeper relationship between the small business and a bank.
To start the process of developing a small business set of packages and appropriate incentives for your bank’s small business market, first establish a project team. These individuals will need to come up with recommendations on the correct product and service mix to promote to targeted customers and prospects based on a full understanding of your business goals.
To gain market insight, your team should develop comprehensive assessment of your small business market competitors along with a summary of the potential and demand for retail products and services in your local market area.
Finally, your bank should implement a tool that allows for managing rewards programs across small business and retail customer segments. This technology should easily enable a tiered incentive plan, automatically transitioning qualified businesses to the next tier as they reach certain thresholds. This technology should offer metrics for gauging the effectiveness of rewards on customer acquisition and retention.
Learn how one of your peers offered a package of small business banking services that retains relationships and rewards customers for banking with his organization. To replay this webinar, click here.
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