Keeping Small-Business Banking Customers Loyal

Small businesses represent a significant, untapped opportunity for US banks in pursuit of high performance.

But banks face two main challenges in servicing this large base of customers effectively. Accenture’s small business optimizer approach can help.

Banks have come to recognize the small-business opportunity, both in terms of companies’ business value and the personal wealth of small business owners. This opportunity is becoming more important to banks as federal regulations drive up the cost of banking operations and reduce certain fees for consumer services. Small businesses have the potential to help banks compensate for this lost revenue.

However, retaining small-business customers and increasing the amount of business they do with a bank have become more difficult in recent years. Historically, banks have tethered their services through the branch model. Yet small businesses no longer are dependent on branches, performing many banking activities (including deposits, payroll and payments) on their PCs. Thus the connection between small businesses and bank branches is being stretched or even broken.

Furthermore, recent national attention to fee increases for checking accounts and debit card usage by the major national banks is causing some small business customers to reexamine their primary banking relationships. At the same time, technologies such as software tools, websites and social media let small businesses compare financial services products and prices more readily and have given these organizations greater choice.

In Accenture’s view, banks have an opportunity to address these two challenges—and, in the process, gain market share and expand their business with small-business customers by:

• Creating greater, more relevant client-centricity. Until recently, banks have segmented their clients according to relatively crude criteria such as geography, size and standard industrial classification codes. Similarly, their sales efforts have been product-driven. Focusing more closely on small-business customers’ needs with a multi-dimensional view will allow banks to capture new clients and retain existing ones, as well as cross-sell within and across business units.

• Mapping the client journey. Banks should know where to engage a client during the start of a new relationship and how to win them from the competition.

• Harmonizing the operating model. Institutions need a distinctive brand proposition—and the ability to deliver that proposition—that can change customer behaviors; reflect customer needs and preferences; and align to bank capabilities, and that is competitively dynamic. Achieving this requires two major simultaneous tradeoffs: local, general relationships versus specialized, national capabilities; and face-to-face interactions versus the use of remote channels.

Banks cannot map every customer pathway. Rather they should cultivate an awareness of their strengths and value propositions, and develop optimized offerings that match their ability to deliver.

Accenture’s small business optimizer exploits six different leverage points across the three key steps in the customer relationship process to empower banks to capitalize on opportunities more effectively:

1. Identify and engage potential customers. Accenture can help banks make the most of their customer data and make their segmentation more sophisticated.

2. Execute campaigns to engage customers and make timely, relevant offers. Accenture can help banks make the most of the relationships they have forged with customers.

3. Capture opportunities to serve the customer. Accenture works with banks to help them improve the process for generating leads to make the most of opportunities to serve customers. Other focus areas include lead management, tracking and learning.

Accenture adopts a modular approach and can design, pilot and roll out such modules rapidly and effectively.