In today’s rapidly changing digital world, everyone is looking for ways to better serve their customer bases. Unfortunately, a growing number of small business owners are being left out of the equation. For decades, they’ve relied on community banks and credit unions to fulfill their needs, but we’re seeing a shift toward fintech alternatives. Traditional financial institutions must reclaim their stake – digitally.
According to athpower, small business owners want quick, convenient, digital access, with nearly two thirds using digital (web and/or mobile) as their primary interface. To address this market trend, fintechs are stepping in and the big banks aren’t waiting either. What’s important to remember is these customers still want that personal touch that’s available from community banks and credit unions, as well as the lower fees and rates you can offer. So, how do smaller banks compete in an increasingly digital world?
Some have developed their own solutions, such as Eastern Bank. Eastern launched a digital platform in 2016 allowing local businesses to get loan decisions in fewer than five minutes. Not stopping there, the banks has launched a tech incubator to keep its edge and continue to offer digital and personal-touch solutions for its customers.
Other smaller banks are partnering their way into digital, leveraging platforms like Kabbage and Fundation. Partnerships allow community-focused financial institutions to continue to ‘own’ their customers, while offering digital loans and minimizing their risk.
But this is the digital world, and I see many institutions stuck on traditional offerings with a new delivery system. Look at what Tennessee Valley Federal Credit Union is doing: The credit union has partnered with Growth Foundation to allow the community to support loans for local businesses. Now that’s a 21st century solution.
Want more? As a small business owner myself, I know money can be tight for companies, as well as for employees. Sunrise Banks created a program to offer short-term, small-dollar loans to employees of its business customers. These loans are great alternatives to expensive payday loans and are underwritten by paycheck deductions to help manage risk. These solutions help not only the employees, but also the bank.
Yes, these examples are all over the place. Which way should your financial institution go? Study your data, listen to your business customers, draw insights and choose a winning path for all stakeholders. Community banks and credit unions can partner with third-party technology companies – like Vetter – to bring in the much-needed digital expertise at a lower cost. The bottom line is your institution must be where your small business customers are when they want it. Efficiency flexibility and mobility for your institution and your customers is a winning combination.