Overworked and Underpaid: The Importance of Keeping the SMB Banking Strategy Close
Money is a renewable resource, but time isn’t. Ask a small-to-medium sized business (SMB) owner, and they’re likely short of both. This presents an opportunity for financial institutions (FIs) to meet SMB account holder needs by providing services and digital capabilities to promote better cash flow and provide time-saving tools that operate like they do – on-the-go.
Increased competition from fintechs in the financial services digital market, such as virtual banks and tech giants, makes this reality more urgent. Banks and credit unions must to find new ways to quickly acquire and more importantly, retain their SMB account holders by providing resources they need most. And while the current economic climate exacerbates SMB needs, their struggle isn’t new.
Understanding these challenges primes FIs to better serve an SMBs’ specific needs, like managing finances, boosting liquidity and enabling digital tools that render anytime, anywhere accessibility for invoicing, reconciliation and real-time payment collection. As a result, banks and credit unions are better positioned to expand digital product offerings and create meaningful solutions to help them both grow.
Overworked and underpaid: Understanding SMB account holder pain points
It’s no secret that an FIs success relies on balancing organizational wants with account holder needs. But, what does an SMB need to thrive? According to the US Census Bureau’s latest data, nearly 90% of all SMBs have fewer than 20 employees. Yet, 23M million businesses have no employees at all, meaning all operations fall under the responsibility of a single proprietor.
To give this context, let’s consider SMBs owners who spend long days travelling to independently meet and heed customer demands. After services are rendered, the work doesn’t stop there, as invoicing, accounting, clerical and bookkeeping duties require attention. With piles of paperwork and receipts, long days turn into long nights and weekends. Instead of relaxing and recharging, SMBs spend nights and weekends compensating for time spent in the field doing their jobs.
Adding insult to injury, payments often take days, even weeks, to post to an SMB’s account. Since transacting during traditional branch hours is difficult, SMBs need tools that help collect earnings and to avoid missed bill payments that stifle their growth.
Here, banks and credit unions have a unique opportunity to change roles from pure custodians of funds into helpers that make accessing money easier and simplify SMB business operations with digital tools for the point of sale (POS). By relieving SMB pressures, FIs drive loyalty and institutional growth, while helping SMBs focus on growing their businesses and eliminating the stresses of office work.
The SMB-banking ecosystem: Restoring the FIs position as business partner
As a business partner, FIs need to gear their services towards value-adding activities that encompass an SMBs banking ecosystem. A staggering 67% of SMB owners would switch financial institutions to obtain these tools and find relief, per ath Power’s small business survey. With more than half of SMB account holders considering an alternative provider for these expanded capabilities, this intensifies the need to better capture and service their small business priorities.
FIs with digital platforms that enable the integration of contact databases, inventory management, accounting systems, and reporting dashboards are well-poised to ward off the threat of attrition and keep SMB account holders internal to their institution.
To truly capitalize on their range of service offerings, and perhaps more importantly, on their rich client insights, FIs create greater loyalty through more integrated, personalized interactions around the SMB’s life stages. What’s more, harnessing the power of consumer data for powerful, actionable insights creates a solid foundation for a sustainable, data-driven future of both the business and the FI.
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