Relationship banking is the secret sauce to successfully banking SMB customers
- SMB owners face isolation, tool proliferation, and vulnerability to economic shifts, managing every business function while lacking revenue cushions for uncertainty.
- KeyBank's Certified Cash Flow Advisor Program is evolving banking relationships from transactional to consultative, with certified advisors providing ongoing guidance through "Key Conversations".
Banks touch the beating heart of a small business, its cash flow. And yet for years, many institutions have failed to leverage their position to build deeper and stickier relationships with SMB customers. For banks like KeyBank, the new era of small business banking relationships centers on advice – revamping the SMB-bank relationship from a transaction hub to a business consultation and growth advisor.
“Our products and services are all centered around the cash flow conversation. The primary objective of the Key Conversation is to understand how the money flows through the operation, find where there may be opportunities to benefit from managing their collection and payable processes differently, maximize the returns of cash positions, and protect against fraud,” said Mike Walters, President of Business Banking at KeyBank.
The SMB customer profile
The challenges of being an SMB owner can be abstracted into three categories: Isolation: SMB owners are the CFO, CMO, COO, and CEO all at once, or what Walters terms, “the Chief Everything Officer”. This means they bear the responsibility of making the right decisions in multiple realms of their business, regardless of their personal expertise in that domain.
Proliferation of business management tools: More fintech tools mean better access to financial services, but small business owners now struggle to manage multiple separate platforms instead of having one unified solution.
Vulnerability: SMBs don’t have the revenue cushions that mid-market enterprises can often rely upon to weather macroeconomic turbulence. 50% of SMB owners currently report that inflation and rising costs are a top concern, and 25% are raising their prices as a response, according to recent research by KeyBank.
Moreover, SMB owners are also adjusting their budgets (37%), business plans (31%), and cost structures (25%) in anticipation of policy changes, hoping that fine-tuning the financial processes of their business will make them more resilient in a time of uncertain economic policy.
“One of the biggest concerns we hear from business owners is around choosing new supply chain partners, especially when tariffs seem to shift. It’s hard to plan when you don’t know what costs might look like next year,” said Walters.
Banks that want to bank SMB customers successfully need to build strategies that can help them feel supported and resilient, removing complexity from their products, as well as the conceptual map that SMB owners have of the bank and its various products.
“Our clients do not care about a merchant service division or an SBA lending division, or a deposit division. These are all internally focused,” Walters said. “Our clients just see one KeyBank. They see a red brand, and they see a relationship manager, and that relationship manager represents everything to them.”
Talking shop: How Key Conversations are helping KeyBank serve SMBs better
Through Key Conversations, advisors are able to assist SMB owners with an array of financial questions, including payments and receivables, invoicing, liquidity management, process automation, and fraud protection.
At the end of March of this year, approximately 900 KeyBank advisors had completed the certification process that made them eligible to participate in the Program.
“We often hear from business owners that the process involving how they ask for money, receive money, and then ultimately turn that money into operating funds is inefficient,” said Walters, adding that when these SMB owners become KeyBank clients, advisors work with them to help add payment portals, fraud protection, and automate tasks.
What is interesting in this conversational approach to banking customers is that KeyBank is in some ways moving the onus of SMB growth planning away from the owner and encouraging its own bankers to take charge and start the consultation process. “We’re also making sure our bankers are reaching out regularly, since 21% of owners said ongoing conversations with their banker would make them feel more secure,” he said.
For SMB owners who are often singularly responsible for the growth and well-being of their business, KeyBank’s approach with Key Conversations adds a support system, helping decrease the isolation of the Chief Everything Officer role.
It also leans hard into relationship banking, a phenomenon many thought would become antiquated in the age of digital finance and fintechs, but may actually be particularly well-suited to the unique SMB-owner customer profile.
Sidebar: The KeyBank and Qolo partnership case study
