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Small Business Banking Segment Analysis - 06.10.16

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Most banks believe they are committed to servicing Small Business customers. They develop products and services for this segment; they invest considerable amounts of time and money trying to improve their Small Business Bankers’ business development (i.e., sales) skills; and some may even create a line of business within the bank entitled “Business Banking” or “Small Business Banking.” But most of these efforts fail to produce the desired growth objectives because banks don’t really understand the needs of the small business customer.

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Small Business Banking Segment Analysis - 06.10.16

  1. 1. Small BusinessBankingSegment Analysis A Banker’s Guide to Understanding How to Effectively Serve Small Businesses Calvin W. Turner Jr. Founder / CEO, Strategic Banking Insights June 10, 2016
  2. 2. Small Business Banking Segment Analysis Strategic BankingInsights Page2 of 12  Most banks believe they are committed to servicing Small Business customers. They develop products and services for this segment; they invest considerable amounts of time and money trying to improve their Small Business Bankers’ business development (i.e., sales) skills; and some may even create a line of business within the bank entitled “Business Banking” or “Small Business Banking.” But most of these efforts fail to produce the desired growth objectives because banks don’t really understand the needs of the smallbusiness customer.  If banks are serious about implementing successful Small Business Banking programs that produce long-term growth opportunities – for both the bank and small business owners – they will need to become more focused on aligning their execution strategies to small business customers’ real needs instead of just peddling loans. Because if they don’t, the alternative lenders, payroll providers, independent sales organizations, credit unions, non- banks, and other savvy businesses are rapidly stepping into the landscape – that has historically been the domain of the banks – to provide small businesses with a full range of financial services.  Therefore, to assist banks in this endeavor, I am providing the first element of a Small Business Banking Segment Analysis that I developed that provides much of the needed information to develop an effective Small Business Execution Strategy that produces real results!
  3. 3. Small Business Banking Segment Analysis Strategic BankingInsights Page3 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses AverageAnnual Sales Sources: www.netbanker.com, www.mbaconsulting.com, www.accessmylibrary.com, Online Banking Strategies for the Internet, http://genylabs.type.com/small_biz_labs, www.SBA.gov , SBA Office of Advocacy o $0 - $100,000 o $100,000 - $250,000 o $250,000 - $1,000,000 o $1,000,000 - $5,000,000 Total Number of Businesses in US in 2006 in each segment Source: SBA Office of Advocacy 92% of all Small Businesses in the U.S. are in the Micro Small Business Segment o 1.7 million = 6.6% o 406,000 = 1.5%o 21 million = 81% o 2.8 million = 10.8% 1 Bank’s share of Market Business Market Size (Includes Bank Customers) Bank Customers* Bank’s Customers ** 332,564 11,461 = 3% 7,541 = 2% 194,516 7,355 = 4% 5,261 = 3% 110,304 7,070 = 6% 5,156 = 5% 33,228 3,626 = 11% 2,525 = 8% Business Market Size Definitions clarifications o Business counts include only those businesses within the Parishes & Counties in which Bancography has defined our markets. o Includes Bank’s customers that D&B has a higher confidence levelof matching WNB customers with the D&B universe. o Only businesses that D&B consider “marketable” are included. Marketable businesses are ones that D&B has enough information on the business to develop a profile on the company. o Only headquarters and single locations selected. o There could be a number of smallbusinesses (particularly micro smallbusinesses) that arenot included in the D&Buniverse. This includes thesmaller businessesthatare not registered with the Secretaryof State,businesses that use their home or cellphone for business,and/or they work out of their home. * Includes marketable records with no regard for D&B matching confidence. ** Includes marketable records with a higher D&B matching confidence level. Typical Business Category Some characteristics based on SBA Office Of Advocacy data o Part-time business owner “mom and pop” operators o Operate fromhome o Service providers (e.g. lawn care, handyman, repairman, laborer, photographers, barbers, hair salons, etc.) o Avon, Mary Kay, Amway, etc. o Small non-profits (e.g. PTO, Civic groups, scout troops, etc.). o Part-time – possibly fulltime – business owner (“mom and pop” operators) o Operate fromhome or business location o Service providers (e.g. lawn care, handyman, repairman, laborer, photographers, barbers, hair salons, etc.) o Avon, Mary Kay, Amway, etc. o Small non-profits (e.g. PTO, Civic groups, scout troops, etc.). o Full-time business owner(s) o Service providers and contractors with paid helpers (usually independent contractors), o Small to mid-sized retailers and restaurants o Small to medium law firm, accounting practice, or consulting business o Health care professionals o Larger insurance agents o Small to mid-size Non-profits o Full-time business owner(s) o Multi-location Retailers and restaurants o Larger service providers and contractors with paid helpers o Larger law firms, accounting practices or consulting groups o Health care professionals o Larger Insurance agents o Larger Non-profits Number of Employees Sources: www.netbanker.com, www.mbaconsulting.com, www.accessmylibrary.com, Online Banking Strategies for the Internet, www.SBA.gov , SBA Office of Advocacy 1 – 2 Employees 1 – 5 Employees 5 – 20 Employees 20 – 50 Employees
  4. 4. Small Business Banking Segment Analysis Strategic BankingInsights Page4 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses Business Profile Sources: www.netbanker.com, www.mbaconsulting.com, www.accessmylibrary.com, Online Banking Strategies for the Internet, http://genylabs.type.com/small_biz_labs, www.SBA.gov , SBA Office of Advocacy o Full and part-time contractors, freelancers, and other self-employed workers. o New businesses and companies that have been in business for less than 3 years. o Single owner, DBA, Sole Proprietor, S- Corporation, LLC, Partnership, or non-profit organization. o May operate from home with no storefront, so “flies under the radar” of most business bankers. o May not be listed with the Secretary of State. o Business owner manages most aspects of the business (e.g. account, accounts payable and receivable, purchasing, HR and payroll, business development and sales, marketing, etc.) but has little knowledge of business financial needs. o Most banking functions are handled at the branch. o Customer typically is reluctant to request credit for business. Instead, users personalsavings, HELOC, personalcredit card, loans from family and friends, etc. to finance the business. o Cash flow is typically a problem. o Time and convenience are premiums. Customers may have personalaccounts (e.g. mortgage, HELOC, checking, payroll, credit cards, etc.) scattered among severalfinancial providers. Need to be able to consolidate business and personal tasks wherever possible. o Owner must also manage personalfinances. o Want access to both personal and business accounts. o Tend to co-mingle business and personal accounts together. o Full and part-time contractors, freelancers, and other self-employed workers. o New businesses and companies that have been in business for less than 3 years. o Single owner, DBA, Sole Proprietor, S- Corporation, LLC, Partnership, or non-profit organization. o May operate from home with no storefront, so “flies under the radar” of most business bankers. o May not be listed with the Secretary of State. o Business owner manages most aspects of the business (e.g. account, accounts payable and receivable, purchasing, HR and payroll, business development and sales, marketing, etc.) but has little knowledge of business financial needs. o Most banking functions are handled at the branch. o Customer typically is reluctant to request credit for business. Instead, users personalsavings, HELOC, personalcredit card, loans from family and friends, etc. to finance the business. o Cash flow is typically a problem. o Time and convenience are premiums. Customers may have personal accounts (e.g. mortgage, HELOC, checking, payroll, credit cards, etc.) scattered among severalfinancial providers. Need to be able to consolidate business and personal tasks wherever possible. o Owner must also manage personalfinances. o Want access to both personal and business accounts. o Tend to co-mingle business and personal accounts together. o Combination of newbusinessesand companies that have been in business for less than 3-5 years. o Single owner, DBA, Sole Proprietor, S- Corporation, LLC, Partnership, Corporations, or non-profit organization. o Typically operatesfrom a storefront or professionaloffice space o Listed with the Secretary of State o Owner/founder dominated,but often have managers and organization structures. o Marketing and Advertising budget. o Good knowledge of business financial needs. o Most banking functions are handled at the branch, but customer is sophisticated enough to welcome banker visits. o Customer has established businessand feels confident to requestbusiness credit. o Cash flow may be a challenge at times. o Time and convenience are premiums. Customers may have personalaccounts (e.g. mortgage, HELOC, checking, payroll, credit cards, etc.) scattered among severalfinancial providers. Need to be able to consolidate business and personaltasks wherever possible. o Owner must also manage personalfinances. o Want access to both personal and business accounts. o Typically segregatespersonaland business accounts and transactions,but stillwants the option to manageboth through the same portal and transfer funds between accounts when needed. o Established businesses and companies that have been in business for morethan 5 years. o Corporations,LLC,Partnership,S-Corporations, public organizations,multi-ownercompanies,or non-profit organization. o Typically operates froma storefront or professionaloffice space o Listed with the Secretary of State. o Business staffing is more specialized. Often operate with managementteamsand professional management.Marketing and Advertising budget. o Very good knowledge of businessfinancialneeds. o Most banking functions areno longer handled at the branch. Business Bankers tend to visitwith the business owner(s)to discuss financialneeds (primarily lending). o Customer probably already has business credit and may be looking for additional lending services. o Cash flow is no longer a major problem,but customer maywant to maintain a businessline of credit for occasionalslack periods and possibly ability to sweep excess funds to investment accounts. o May be interested in expanding the business operations,which will require additional personnel,facilities,and equipment. o May maintain corporate cards for employee business expenses. o Business is interested in additionalservicesand benefits for employees. o Business is looking to gain efficiencies and is also sophisticated enough to shop ratesfor banking services. o Owner(s) must also manage personalfinances. o Want convenient access to both personaland business accounts. o Typically segregates personaland business accounts and transactions, but still wants the option to manage both through the same portal and transfer funds between accounts when needed. o Owners may qualify for PrivateClient privileges and want investment options.
  5. 5. Small Business Banking Segment Analysis Strategic BankingInsights Page5 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses 2 How do bank’s competitors serve these customersand howare they organized Sources: www.netbanker.com, www.mbaconsulting.com, www.accessmylibrary.com, Online Banking Strategies for the Internet, http://genylabs.type.com/small_biz_labs, www.SBA.gov , SBA Office of Advocacy o Mass Market advertising to drive customers to branches o Lead products are checking accounts and credit cards. o Banks will lure these customers into their branches with FREE business checking and/or no annual fee credit cards, and then cross-sell other fee-based products and services o Finite set of business products will appealto this segment o Branch staffs are trained to handle non-lending business needs to service this sector. o Streamlined credit approvaland on-boarding processes. o Apply for business credit card online. o Centralized underwriting based on personal FICO score o American Express solicits these customers for credit and offers instant approvalby telephone or over the Internet based on owners’ FICO scores. o Most card issuers offer card rewards. o American Express, Merchant Services providers, and other banks purchase prospect lists from Secretary of State offices and solicit these customers before they open for business. o Mass Market advertising to drive customers to branches o Lead products are checking accounts and credit cards. o Banks will lure these customers into their branches with FREE business checking and/or no annual fee credit cards, and then cross-sell other fee-based products and services o Finite set of business products will appealto this segment o Branch staffs are trained to handle non-lending business needs to service this sector. o Streamlined credit approvaland on-boarding processes. o Apply for business credit card online. o Centralized underwriting based on personal FICO score o American Express solicits these customers for credit and offers instant approvalby telephone or over the Internet based on owners’ FICO scores. o Most card issuers offer card rewards. o American Express, Merchant Services providers, and other banks purchase prospect lists from Secretary of State offices and solicit these customers before they open for business. o Combination of Mass Market advertising, networking,and business development initiatives to drivecustomersto branches o Lead products are checking accounts and credit cards. o Banks will lure these customers into their branches with FREE business checking and/or no annual fee credit cards, and then cross-sell other fee-based products and services o Expanded suite of business products including credit options,RCD,Group banking,etc.,will appealto this segment o Branch staffs are trained to handle non-lending business needs, but more sophisticated lending and TM services arereferred to more specialized bankers. o Streamlined credit approvaland on-boarding processes. o Apply for business credit card online. o Centralized underwriting based on personal FICO score. o American Express solicits these customers for credit and offers instant approvalby telephone or over the Internet based on owners’ FICO scores. o Most card issuers offer card rewards. o American Express, Merchant Services providers, and other banks purchase prospect lists from Secretary of State offices and solicit these customers before they open for business. o Combination of Mass Market advertising, networking, and business development initiatives to drive customers to branches. o Business Bankers willcall on larger,more established customers. o Lead products are checking accounts and credit cards. o Banks will lure these customers into their branches with FREE business checking and/or no annual fee credit cards, and then cross-sellother fee-based products and services o Expanded suite of business products including credit options, RCD, Group banking, etc., will appealto this segment o Branch staffs are trained to handle non-lending business needs, but more sophisticated lending and TM services are referred to more specialized bankers. o Streamlined credit approvaland on-boarding processes. o Apply for business credit card online. o Centralized underwriting based on personal FICO score, but also offer credit options without personal credit. o American Express solicits these customers for credit and offers instant approvalby telephone or over the Internet based on owners’ FICO scores. o Most card issuers offer card rewards. o American Express, Merchant Services providers, and other banks purchase prospect lists from Secretary of State offices and solicit these customers before they open for business. 2 Who owns the Market Share? Source: Feedbackfrom Bankers on Varies by Region. Major competitors arelargerbanksand community banks Larger Banks include: Regional and Community Banks Non-Banks o CapitalOne º Hancock Bank º American Express o Chase º Whitney Bank º Square o Wachovia º Iberia Bank º Intuit o Regions º Gulf Coast Bank º Rapid Advance o Fifth 3rd º First NBC Bank º Newtek o Synovus º Lending Club o Compass Bank o Wells Fargo o Bank of America
  6. 6. Small Business Banking Segment Analysis Strategic BankingInsights Page6 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses 2 What are our Competitors Vulnerabilities? Source: Focus Group Discussions with Small Businesses o All but one of the business owners in the discussions use multiple banks and brokerages for investments. o They consider the larger banks to be too big and impersonal o Mass market appealis undesirable to some larger and/or more sophisticated business customers. o Do not consider branch bankers or call center staff to be customer-service focused. o Branch people are not knowledgeable about business banking products and services and are unable to answer questions about credit options, denial of credit, etc. o Focus group respondents expressed little – if any – loyalty towards their banks. In fact, all business owners are “moveable” for better service or a “relationship.” o Only half of business owners claimed to have a “banker,” but none described the relationship as strong or close. Those who did not have a banker would like to have such service, but have come to expect little or nothing from their bank in terms of a relationship. o Customers do not feela bank is appropriate for either payrollservices or small business insurance – mostly because of perceived “overstepping”their areas of expertise. o All business owners would appreciate a relationship with their bank/banker in which services beneficialfor their businesses are suggested. o One specific product of dissatisfaction is credit card processing for those who take credit card purchases. Only two use their primary bank for credit card processing, but none are happy with the service regardless of the provider. Where are the Profit Pools within each segment? Source: BOLB Strategy document o Deposits – Projected AnnualEarnings on Balances per customer $443 (based on $22,126 ACB of non-analysis customers at 2.00% spread). o Average annualNet Merchant Services income per customer $761 o Average AnnualBusiness Check Card Income per customer $285 o Average AnnualBusiness Credit Card Income per customer $637
  7. 7. Small Business Banking Segment Analysis Strategic BankingInsights Page7 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses Banking Opportunities (eitheralone or in partnership with non-banks) Sources: www.netbanker.com, www.mbaconsulting.com, www.accessmylibrary.com, Online Banking Strategies for the Internet, http://genylabs.type.com/small_biz_labs, www.SBA.gov , SBA Office of Advocacy o Business Checking o Merchant Services o Ability to accept ApplePay and AndroidPay o Mobile CheckDeposit o Business Online Banking with BillPay o Business CheckCard o Instant approvalfor VISA Business Card based on personalcredit o Business Credit Card with rewards o Website design and hosting o Business Checks o Business printing services o Opportunity to consolidate personaland business banking o PersonalChecking o Home Mortgage o HELOC o PersonalCredit Card o PersonalCheck Card o PLOC o Investment services o Business Checking o Merchant Services o Ability to accept ApplePay and AndroidPay o Mobile CheckDeposit o Business Online Banking with BillPay o Business CheckCard o Instant approvalfor VISA Business Card and/or BLOC based on personalcredit o Business Credit Card with rewards o SBA loans o Website design and hosting o Business Checks o Business printing services o PayrollServices o TreasuryManagementServices o Direct Deposit o Wires o ACH o Opportunity to consolidate personaland business banking o PersonalChecking o Home mortgage o HELOC o PersonalCredit Card o PersonalCheck Card o PLOC o Investment services o FREE Business Checking o Merchant Services o Ability to accept ApplePay and AndroidPay o Mobile / Remote CheckDeposit o Business Online Banking with BillPay o Electronic Invoicing with the ability to bill customers electronically o Business CheckCard o Instant approvalfor VISA Business Card and/or BLOC based on personalcredit o Business Credit Card with rewards o SmallBusiness Line of Credit or Business Loan o SBA loans o Website design and hosting o Business Checks o Business printing services o Payroll Services o Treasury ManagementServices o Direct Deposit o Wires o ACH o PayrollCards o Sweep Services  ODP o Remote CheckDeposit o Group banking for employees o Opportunity to consolidate personaland business banking o PersonalChecking o Home mortgage o HELOC o PersonalCredit Card o PersonalCheck Card o PLOC o Investment services o FREE Business Checking o Merchant Services o Ability to accept ApplePay and AndroidPay o Mobile / Remote CheckDeposit o Business Online Banking with BillPay o Electronic Invoicing with the ability to bill customers electronically o Business CheckCard o Instant approvalfor VISA Business Card and/or BLOC based on personalcredit o Business Credit Card with rewards o Corporate Card o Small Business Line of Credit or Business Loan o SBA loans o Equipment loans,vehicle loans, expansion loans, etc. o Website design and hosting o Business Checks o Business printing services o Payroll Services o Group banking for employees o Employee benefits o TreasuryManagementServices oRemote CheckDeposit oPurchasing Cards oDirect Deposit oWires oACH oPayrollCards oSweep Services  Investment/LOC/ODP oZBA Services oPositive Pay o Opportunity to consolidate personaland business banking o PersonalChecking o Home mortgage o HELOC o PersonalCredit Card o PersonalCheck Card o PLOC o Investment services
  8. 8. Small Business Banking Segment Analysis Strategic BankingInsights Page8 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses 3 What is Bank’s Value Proposition to service this segmenttoday? Source: Feedbackfrom Bankers o Long-time clients from past acquisitions have high loyalty to the bank and they know their bankers o The Bank offers “big bank” products with a community bank feel. o Existing customers refer other business clients to us o Team banker approach o Some relationships began with a loan o Rapport-building through networking and calling effort o Convenience (located near business or home) o Banker accessibility o Reputation o Banker community involvement o Problem resolution o Local decision-making o Perception of less bureaucracy o Don’t have to talk to an answering machine o No long waits in branches o Aggressive prospecting, calling process, and asking for the business o Deposits posting same day
  9. 9. Small Business Banking Segment Analysis Strategic BankingInsights Page9 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses 4 How must Bank align itself to service this segment? Source: Feedbackfrom Bankers Alignment o Traditional Business Banking marketing and servicing approaches may not be appropriate for Micro Business Segment Acquisition o Since these customers typically “fly under the radar,”cannot market directly to them. o Utilize a combination of the following tactics to drive customers into the branch: o Advertising o Direct Mail o Referrals fromother customers o PersonalRelationships o Proximity (location) o Social Media o Bank Website o Web Ads on appropriate business websites o New account profile (that identifies a customer may also have a small business) o Branch Bankers networking at Small Business Functions, Training, Community Activities, etc. Service and Delivery o Branch is primary method of service delivery o Utilize digital channels and social media to interact with customers and handle some types of fulfillment o Streamlined account opening, enrollment, and approvalprocesses. o Small credits can be granted that do not require financial documents and approved based on personal FICO score. o Move Letter of Credit Doc Prep from branch to back office o Reduce the amount of administrative work that must be performed by the banker in the branch o Less portfolio management responsibilities for bankers to allow for more coordinated and consistent calling efforts o Improvements could be made to back office which most deem as too bureaucratic. Local representation in loan ops and underwriting would improve communication and turnaround times. Alignment o Align resources to service this market segment Acquisition o Utilize a combination of the following tactics to drive customers into the branch: o Advertising o Direct Mail o Referrals fromother customers o PersonalRelationships o Proximity (location) o Social Media o Bank Website o Web Ads on appropriate business websites o New account profile (that identifies a customer may also have a small business) o Branch Bankers and Business Bankers networking at Small Business Functions, Training, Community Activities, etc. o Business Banker and Branch Manager Outbound Calling Efforts on existing customers for cross-sales and prospect lists. o TreasuryManagementSales Calls Service and Delivery o Branch is primary method of service delivery o Utilize digital channels and social media to interact with customers and handle some types of fulfillment o Streamlined account opening, enrollment, and approvalprocesses. o Small credits can be granted that do not require financial documents and approve based on personalFICO score. o Move Letter of Credit Doc Prep from branch to back office o Reduce the amount of administrative work that must be performed by the banker in the branch o Less portfolio management responsibilities for bankers to allow for more coordinated and consistent calling efforts o Improvements could be made to back office which most deem as too bureaucratic. Local representation in loan ops and underwriting would improve communication and turnaround times. o Alignment o Align resources to service this market segment Acquisition o Utilize a combination of the following tactics to drive customers into the branch: o Advertising o Direct Mail o Referrals fromother customers o PersonalRelationships o Proximity (location) o Social Media o Bank Website o Web Ads on appropriate business websites o Networking at Small Business Functions, Training, Community Activities, etc. o New account profile (that identifies a customer may also have a small business) o Branch Bankers and Business Bankers networking at Small Business Functions, Training, Community Activities, etc. o Business Banker and Branch Manager Outbound Calling Efforts on existing customers for cross- sales and prospects. o Treasury Management Sales Calls Service and Delivery o Bankers Need to utilize digitaltechnologyto prepare documents and either transmit or go to client sites for signatures. o Utilize digital channels and social media to interact with customers and handle some types of fulfillment o Streamlined account opening, enrollment, and approval processes. o Small credits can be granted that do not require financial documents and approve based on personalFICO score. o Move Letter of Credit Doc Prep from branch to back office o Reduce the amount of administrative work that must be performed by the banker in the branch o Less portfolio management responsibilities for bankers to allow for more coordinated and consistent calling efforts o Improvements could be made to back office which most deem as too bureaucratic. Localrepresentation in loan ops and underwriting would improve communication and turnaround times.
  10. 10. Small Business Banking Segment Analysis Strategic BankingInsights Page10 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses 5 What new products/services and/or features mustbe incorporated to service this segment? Source: Feedbackfrom Bankers Servicing Concept o Utilize digital technology to simply customer on-boarding process to make it easy to establish new business banking customer relationships o Additional services should be a part of on-boarding process without requiring additional documentation for BOLB, CheckCards, etc. Credit Products o Ability to apply for Business VISA Card and/or BLOC online and receive instant approval o Streamlined underwriting for credit based on owner’s PersonalFICO score o Flexibility in credit products to allow carve-outs and term-outs on business/commercial lines of credit. o Align Business Real Estate guidelines similar to those of consumers o No Annual Fee for Business VISA Card (with relationship qualifiers) o Need to be more flexible in loan and and/or line of credit approval o Segregate Business Credit Card into two products: One for Small Businesses and a Corporate Card New Account Opening o Streamlined process to open new accounts, enroll in BOLB and BillPay, and establish small business credit o Existing customers should be able to enroll in BOLB online without having to visit the branch. BOLB o Competitive BOLB product (e.g. simplified enrollment, ability to link accounts of personal/business, and business to other business). o Mobile and tablet BOLB enablement o Simplified BOLB and internal funds transfer enrollment. o Increase internalfunds transfer limits in BOLB o Allow externalfunds transfers and ACH management. “Online Banking is our Achilles’ heel.” o Allow owner or principals of company to designate additional individuals to have access to BOLB o FREE BillPay o Increase the number of checks that can be viewed through EStatements on BOLB beyond the current limit of 75 o Allow customers to receive a paper statement in addition to viewing an EStatement online (at an additional cost) o Ability to view personalaccounts and business accounts with a Single Sign-On Checking Accounts o Simplify business checking products. o Perhaps another non-analyzed checking account with up to 500 transactions with a minimum balance as another alternative to Account Analysis o Expand offerings to bridge the gap between packaged checking and Analysis o Relationship pricing – offer FREE business checking account with other products beside Merchant Services (e.g. qualified relationship, loans, money market accounts, credit cards, etc.) o Allow ODP to be offset by a designated reserve deposit account (Savings Account, or other checking account) because customers may not qualify for BELOC-ODP o A low transaction account FREE. o Business Checking Account “Switch” kit Rewards o Need Business Credit and Debit card rewards Treasury ManagementServices o Lower cost alternative for RCDscanners for small businesses o Small Business Sweep service
  11. 11. Small Business Banking Segment Analysis Strategic BankingInsights Page11 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses 6 What sales and servicesstrategies should we incorporate in order to leveragethe sales forces and branch resources? Source: Feedbackfrom Bankers Banker Support – Training and Development and Tools and Resources o Develop a simplified set of products that appealto each targeted segment to include employee packages o Provide appropriate banker training to maximize delivery and make appropriate referrals beyond the product set. o Online training modules for Business Banking o Provide bankers with customer/prospect list and other tools o Product knowledge and execution (the ability to match knowledge to client need) o Training on Business Development (calling, interviewing, networking, negotiating) o Encourage bankers to utilize social media to connect with customers and prospects o Expand Business Banking Acumen training for Branch Managers o Comprehensive relationship management strategy to include portfolio management and ownership, and growth o Training for bankers to tap into customers’ centers of influence as a source for additional business referrals o Implement program to encourage new customer referrals from existing customers Market Identification a) Opportunities – Composition (number of clients and type e.g. private, Business Banking, Mass) b) Align Staff, number and type (number of bankers and type of bankers based on market needs, e.g. private bankers, Business Bankers, Branch Bankers) o Look into branch staffing model to allow for Branch manager to do outbound calling o Role clarity for bankers o Branch should be configured to meet the needs of the community/expand where needed, more Treasury Management in the field Align Marketing Strategy to Support Small Business Focus – Internaland External o Increase advertising to target Small Business customers and highlight Small Business Banking o More campaigns such as Smart Business Money Market promotions o Disciplined business development calling efforts by Business Bankers and Branch Managers o Increased Banker Community involvement o More marketing support to increase Bank brand in new markets outside of New Orleans Technology and Processes o Should support business development strategy of retention/expansion/acquisition Incentives o Should support and promote desired behaviors, strategic objectives, and performance measurements. 7 What are the right metrics to drive performanceof the sales and service staff to fulfill the value proposition? Source: Cornerstone Business Banking Strategy Metrics should enable Bank to trackand measureresults in four key areas: o Growth o Retention o Customer Satisfaction o Expansion/penetration (share of wallet) Cornerstone suggested the following metrics could be used to measureresults: o Open 1 new Business Checking Account per branch per week o Retain 90% of customer relationships o Achieve 90% Customer Satisfaction Levels o Customer penetration of 4 products per client
  12. 12. Small Business Banking Segment Analysis Strategic BankingInsights Page12 of 12 Business Type Description According to SBA Office of Advocacy Micro Small Business “Main Street” Small Business Mid-Level to Larger Small Business SO/HO (Personal or “Non Employer” Businesses) Micro Small Businesses 8 What are the right management processes to manage the business model? Sales and Service to leveragesales forceand branch resources: o Clearly define and communicate sales vision and strategies to ALL employees o Apply consistently throughout the company o Value the employee with effective coaching and development opportunities (Link individual banker contribution to strategy). o Create a sales and service model to span the client relationship cycle o Provide simplified products and services specific to the valued segments; design to make assessing and meeting needs easy for client and banker o Properly align resources o Set clear expectations, track, inspect, coach, recognize, challenge o Reward performance measures within the banker’s control Valued Segments o What can we provide to customers that is unique to the Bank? The banker; well trained, professionaland excited to serve our clients. o How do we value existing customers through proactively managing their relationships? 1. Offer services that fit their needs 2. Provide clients with knowledgeable, professionalbankers empowered to understand needs, recommend solutions with unmatched customer attention 3. Make it easy to do business 4. Client contact frequency protocols 5. Follow-up and follow-through Calvin W. Turner Jr. is the Founder and CEO of Strategic Banking Insights, a resource that provides industry intelligence, and strategic expertise and insights to enable financial institutions to develop and execute successful programs that contribute to new customer acquisit ion, improved customer retention, greater share of wallet, higher levels of customer service, and ultimately increased profitability for the bank. Please feel free to visit our website to learn more about Strategic Banking Insights. Follow Strategic Banking Insights on LinkedIn. Follow Calvin Turner on LinkedIn

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