The Customer Effect

Three ways technology is changing business banking

  • The effects technology has had on consumer banking are transferring to small business banking
  • Banks are finding faster ways to onboard new small business customers, provide them with the financial education and learning tools they need and focusing on the overall relationship beyond the transaction
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Three ways technology is changing business banking

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Banks are focusing on small businesses as they realize those customers are consumers, too. And with small businesses making up 99.7 of U.S. employers, they represent a big opportunity for banks.

“Many of the impacts of technology on consumer banking are transferring to the business banking space,” said Eric Byunn, partner and co-founder at Centana, a growth equity firm focused on the finance industry. “Users are users, whether they login in their business or consumer roles, and they expect the same intuitive ease of use and completeness of functionality. In fact, we’re seeing an increased desire from customers to have the same interface, login, etc., across business and consumer usage.”

But business banking is much more complex than consumer banking, which makes it hard integrate those changes. There are more elements — such as multiple accounts, higher use of domestic and international wires, multiple users in multiple roles — and often higher security and compliance requirements.

Here are three ways technology and fintech have changed small business banking:

Applying for financing via mobile
This year, Bank of America upgraded its app to let small business customers apply for a loan or credit line between $10,000 and $250,000 directly from the app. It also released a loan product tool that helps small business customers find a loan. They also can calculate monthly loan payments and connect with the bank’s small business specialists through online chat, phone or by scheduling an in-person appointment with a small business banker through the app.

“It’s important that we’re giving clients the opportunity to bank how they want, where they want, when they want,” said B of A head of small business banking Sharon Miller.

Faster loan decisions
Last year, Wells Fargo launched an online lending product built in-house called FastFlexto compete with lending startups OnDeck Capital and Bond Street. Loans can be funded as soon as the next business day. Wells is also looking at opening that product to customers outside of its own, effectively seeking to disrupt some of the original fintech “disruptors.”

JPMorgan Chase went another route, using OnDeck Capital’s technology to provide small business loans quickly to its own customers as part of a service called Chase Business Quick Capital. Chase can pre-score customers using their data so when they apply for the loan, they only have to click through six screens.

“In the past, it could take weeks if not over a month for decisioning, and we’ve taken that down to near real-time decisioning,” Julie Kimmerling, head of Chase Business Quick Capital and a senior manager on the business banking strategy and business development team, told Tearsheet in June. “They don’t have to submit any additional documentation.”

Similarly, Wells Fargo works with a startup called Blend that makes it easier for customers to see data and provide documents and e-signatures. With the right algorithms, the bank can make better risk assessments, said Secil Watson, Wells Fargo’s head of wholesale Internet solutions.

The goal of Blend and other providers is to faster serve customers who want to get a small business loan, a business line of credit, a commercial real estate loan for a small business or a mortgage, Watson said. “It’s still a very considered decision, but it has a lot better data, so the underwriting is faster.”

One that’s not jumping on the AI bandwagon to speed up underwriting is Bank of America, which says it needs time to understand customers’ needs before making an offer. “We’re not going to be like a fintech where you apply today and get approved tonight,” Miller said.

Improving the customer relationship before and after the transaction
The shift in how banks are treating small business customers mirrors what happened with consumers a couple years ago, when banks started paying attention to customers across their entire financial lives, not just based on how much was in their accounts.

“The industry used to be, ‘You need a loan, we’re going to look at your credit and provide you a loan,” Miller said. “We listen to our customers and what they’ve told us is they need the ongoing support before and after, and that’s why we’ve invested in all our professionals in the field today.”

An example is Wells Fargo Works for Small Business Business Credit Center, which provides information and tools to help small business owners navigate the credit journey. It provides credit-related articles, infographics and videos, questionnaires designed to help small business owners compare financing options; credit coaching video series; credit quiz; and application tracker.

As they did with consumers, banks are giving small businesses ways to do their own research before coming into the branch to talk with a banker.

“We call people that get declined and walk them through what happened, why they got declined and what they need to do to get approved,” said Lisa Stevens, Wells Fargo’s president of western region regional banking. “When small business owners they get declined for a line of credit or loan, they often don’t know why.”

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