How to serve SMBs that are short on time and long on problems feat. Mark Valentino, Head of Business Banking, Citizens

SMBs need more from their FIs, and data echoes this demand. 62% of SMB owners have reported feeling like their business banking options don’t go any further than the services already available in their personal accounts. 

So banks have to find a way to not only differentiate their business banking products from fintech and platform competitors but their own personal banking products as well. One bank that is leading the way is Citizens, which has a three-pronged strategy for SMBs, according to its President & Head of Business Banking, Mark Valentino. 

Citizens SMB Banking Playbook

1) Identify the right problem: Rather than guessing what their clients need, Citizens focus on listening and gathering feedback – it’s an essential step that ensures that the things the bank is spending its resources on are the right things. 

One way the bank does this is through its annual Business Outlook report. For example, this year’s report focused on finding out how businesses were juggling multiple platforms, their preferences when it comes to payments, business goals, and a comparison between companies that use tools that provide insights into the business’ inner workings and those who don’t.

Some interesting outtakes from the report include: 

a) Business Bankers have a role to play in SMB success: 83% of what Citizens calls insight-driven companies utilize a dedicated business banker, compared with just 59% of other businesses. Those who lean on this relationship with their business banker are more likely to make better decisions and experience increased profitability. 

b) Getting paid faster means using the right tools: 60% of businesses that want to get paid faster are using payment tools like Venmo and Cash App, as well as invoicing tools, according to Citizens. 

These insights show that SMBs are layering in services from the bank with those available from third parties. This means that banks should recalibrate and capitalize upon what they can offer their clients that third-parties can’t: advice and trust. At the same time, banks also need to ensure that their tools play well with those offered by platforms and fintechs.  

“We have a pretty family-oriented big bank. My colleague, Taira Hall, who is running Enterprise Payments across all of Citizens, is actually talking to my sales and business banking leaders, commercial teams, and our new private bankers on a regular basis. That’s how we take real life feedback and apply it to innovation and product development, because we want to make sure we’re solving the right problems,” said Valentino, at the recent The Big Bank Theory conference hosted by Tearsheet at the Mastercard office in New York.  

2) Build for integration: As the Business Outlook report alludes, banks cannot offer products and services that operate in a vacuum and don’t speak to tools offered by other industry players like fintechs. 

“When we talk about that product set like cash flow forecasting for our customers, if we were just directing all of our customers to a third party to say, hey, we found this great company to partner with, why don’t you guys go all open accounts with them? That’s a janky customer experience. And that was the old way of doing things. It’s not going to be successful. Our customers are telling us that they’re short on time and long on problems. We do not want them to have to log into 22 different applications to run their business,” said Valentino. 

The ideal solution set for the bank and the customer both would be to have third-party experiences inside its own environment. Not only does it solve for customer experience but it also ensures that customers stay attached to the bank rather than move in and out of its environment. It tells customers that the bank not only cares about what tools they have available, but also prioritizes the ease of use with which they access them.

“We don’t want customers to have to go to Zelle to make business payments. We want Zelle for business to be inside of online banking,” he said. 

3) Being more than a money mover: Banks already play a central role in the lives of their SMB customers by being a home for their finances, but they can widen their focus and help SMB owners gain access to tools and resources that makes their job easier.

Citizens is doing this in two ways: 

1. A focus on operations: Banks that are able to serve SMBs successfully focus on providing tools for not only how money moves in and out of these businesses but also how these businesses are run. Citizens has expanded its focus by partnering with Mastercard and offering its SMB clients access to Digital Doors, which helps SMBs gain access to tools that ease the process of building a digital presence, helps with marketing, provides tools that make giving employee benefits easier, and helps SMBs secure their infrastructure from getting attacked by cybercriminals. 
   
   It’s this focus on helping SMBs not just survive but thrive that can help banks stand apart from the competition. 
   
2. Building up SMB leaders: SMB owners face a multitude of challenges, which can keep them from ensuring that they are investing in their future, upskilling and building strategies that can help them stay ahead in the long term. While this tunnel vision seems like an occupational hazard, issues like lack of access to resources, limited funds, and being unsure where to start can increase the inertia SMB owners feel.
   
   Banks that want to invest in building healthier SMBs can act as a bridge between SMB owners and these resources. For example, Citizens has partnered with Luminary to bring 142 of its “Small Business Community Champions”, who have received grants from the bank, an additional resource to add onto the advice and guidance they receive from the bank’s relationship managers.

“It’s a global organization which is basically social in nature, and SMB owners can actually choose to participate in person at their offices or when they travel around the world, or they can just leverage their online training modules. We’re really excited about that because it’s focusing more on the business owner as a whole: We’re not just here to bank you. We want to see you be successful in terms of growing your business,” said Valentino. 

The first leg of Citizens’ strategy was to gain information from their customers by using its survey as well as the insights from its bankers and relationship managers. The second leg builds on this feedback and focuses on implementation and building integrated experiences. The third and last leg completes this loop by centering the same bankers and relationship managers and using them to communicate with customers about the tools Citizens has made available to them. Valentino wants these bankers to be an enabler and a consultant to SMB clients, not just their banker.

“We’re taking our bankers and relationship managers to act as the trusted advisor. We don’t want our bankers just offering traditional financial solutions. We want them to leverage these tools so whether a customer walks into a branch or calls our contact center, these bankers are really there as a consultant and advisor to help the small business figure out how to grow their company. That’s really how you create brand value and how you create lasting legacy for the business owner,” he said. 

If you want to diver deeper into how Citizens structures and strategizes for its partnerships, listen to his whole talk at The Big Bank Theory below.

Sidebar: The Entrepreneurship through Acquisition trend in SMBs

Over the last few years, ETA has become even more popular with the help of the Small Business Administration (SBA) 7(a) loan program which allows aspiring entrepreneurs to acquire companies by borrowing money on advantageous terms compared to a private capital loan. 

The rise of ETA may be seen as a result of the maturation of certain systems and the betterment of others. One particular catalyst is the government, which is incentivizing ETA through SBA lending.

Increase ETA through SBA loans can also have an effect on society. It makes becoming business owners easier and also eases the process for those groups that have found it hard to be entrepreneurs due to systemic biases. 

“SBA loans are partially guaranteed by the government, which reduces the risk for lenders and can make them more willing to extend credit to small businesses,” said Arthur Birenbaum, Head of SBA Lending at Grasshopper Bank. This reduction in risk plays a role in motivating lenders in difficult credit markets, according to Birenbaum.|