How to Position Your Bank as a Trusted Advisor for Small Businesses—And Why It Matters

As the dust from the pandemic-induced economic storm continues to settle, small businesses are finally emerging with a renewed entrepreneurial spirit to pursue their ambitions of the American Dream. However, many find themselves undercapitalized and unprepared to meet the challenges of a more competitive and technologically advanced consumer and business market.

In the aftermath of the storm, small businesses need access to capital to improve efficiency, and they are in critical need of advice. But, after decades on the wane, the relationship between banks and small businesses needs a reset. If small business owners are ever to regain confidence in their bank "partnerships" and the banks ever hope to capture a share of the thirty-two million-strong—albeit vastly underserved—small business market, they must both reconsider their relationships.

The Disconnect Between Banks and Business Owners

Today’s small business owners have come to expect more from their banking relationships—beyond commercial lending and deposit accounts. But many are disappointed. According to J.D. Power, just 37% of small business owners feel appreciated by their financial institutions, with only 32% feeling understood. Worse, less than 20% of small business owners say their bank recommends financial products or solutions.

That’s a significant disconnect, leaving business owners feeling as though their banks don’t really understand their businesses. Either business owners are unaware of the products and solutions offered by their bank, or the bank is unaware of the business owners’ needs. Either way, the lack of a personal connection between the business owner and the bank precludes the kind of communications and guidance most business owners need to assess their needs, much less to determine which banking solutions are most appropriate.

Business Owners are Looking for Trusted Advisors

Small businesses are looking to their banks as partners in their success, preferring a trusted relationship with a community or regional institution. Banks that fully embrace a trusted advisor role will be in a much more competitive position to capture their share of the burgeoning small business market.

Critical Elements of Becoming a Trusted Advisor

The onus is on the banks to reach out and build business relationships, offering a suite of integrated products that cater to small businesses and the capabilities to act as trusted advisors. The upside for banks and their business customers is substantial. According to JD Powers, overall satisfaction is 112 points higher among small business customers who have been assigned an account manager they say is a “trusted advisor.”

Dedicated Business-Centric Staff

At the center of this strategy is the placement of dedicated, business-centric staff focused exclusively on cultivating relationships and serving the interests of business owners. Referred to in some banks as business relationship managers, small business specialists, or business banking representatives, these are demanding positions, combining the ability to work with business owners strategically and working with them to bring their current needs into focus.

Focus on Understanding Business Customers

Business owners’ major criticism of banks is that they just don’t understand their business. It is critical for business bankers to have a thorough understanding of a customer’s business, what it does, its challenges, the industry, and its competitors. Data programs can provide background information, financial data, and information about the owners.

Business owners who recognize their banking representatives that understand their business, needs, and concerns have more confidence in them as trusted advisors.

Education and Guidance First

Although they should have an in-depth knowledge of the bank’s specialty business products and services, these business banking specialists function primarily in an advisory capacity. They provide knowledgeable guidance for business owners at any stage of their business life cycle. They advocate for the customer within the various business banking departments to ensure a smooth process of selecting and implementing solutions while educating them along the way.

Central Point of Contact

Another big complaint among business owners is the lack of a one-on-one relationship within the bank and being shuffled among banking staff. The business banking rep should become the central point of contact for the business customer for all questions, concerns, issues, and follow-ups. Then its rinse and repeat in an annual process of reviews, assessments, and updating solutions as the customer’s needs evolve or the business environment shifts.

Banks that want to capture a share of the 32 million small business market must focus on building business relationships, not creating business transactions—on becoming business-centric, not bank-centric. Now more than ever, business owners are looking for banks as trusted advisors with the capacity and the desire to form strategic partnerships for business success.

 

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