Every day, small and medium businesses (SMBs) are striving to succeed against a seemingly never-ending set of obstacles. As a financial institution (FI) providing services to SMBs, it’s in your best interest to ensure the ongoing success of your customers.
But manual-heavy processes or over-reliance on analog data (read: stacks of paper) render your FI slow-moving when it comes to serving as a growth partner for your SMB customers.
The key to unlocking success for you and your clients is access to realtime information about their business and financial performance—and you can get there with the advanced, digital data analytics tools used by successful FIs.
In this article, we’ll explore how real-time access to actionable insights on small businesses helps both your FI and its SMB customers reach higher levels of growth and profitability.
Increase Targeted Selling to Your Business Customers
You already know the value of cross-selling to your customers. Data from Fiserv shows that the more products a client has with an FI, the longer they will remain a client.
- On average, a customer with one product at their bank will stay for 18 months.
- Increase that to two products, and the customer will stay for four years.
- If a customer holds three products with the same bank, they’ll remain a customer for nearly seven years.
However, you probably also know cross-selling can be tough.
Taking a data-driven approach can greatly increase your chances of making the sale. Ongoing monitoring of your customers’ financial accounts allows you a better understanding of where each customer is at.
You’ll have a better chance of closing the deal when you’re selling a product your client truly needs. And you’ll have a better chance of identifying that useful product when you have real-time data pointing you in the right direction.
Better Understand Your FI’s Risk
48% of U.S. small businesses are concerned about their cash flow.
While your FI can partner with those SMB customers to course-correct, the reality is that a client experiencing issues with cash flow can turn into a bigger risk than you want to take on. You’d want to be aware of the risk so you can get ahead of it before it becomes realized.
“Managing credit risk requires monitoring your customers’ business credit as a larger picture of their financial health. You want to be sure that you will be paid for the goods or services provided,” agrees Ian Varley, CEO of Eagle Business Credit. “There are a lot of components involved in managing credit risks, but it’s crucial to have a process in place.”
Ongoing monitoring of these key small business statistics can help you keep an eye on the risk profile of each SMB client in your portfolio.
Deliver a Better SMB Experience
A recent PwC survey of SMBs found that 22% of small business owners were considering switching primary banks—with those who applied for the paycheck protection program (PPP) twice as likely to switch compared to those that did not apply.
The bottom line, according to the report, is that SMB customers who feel their banks haven’t met expectations are ready to jump ship. With that in mind, your FI needs to provide its SMB customers with an experience that keeps them retained.
Fun fact: Boss Insights helped CCBank double its number of PPP loan approvals and reduce its time spent approving each loan by 80%.
The use of modern data analytics tools gives your FI a real-time picture of what your SMB clients need. But a good customer experience goes beyond simply selling the right product at the right time.
Fintechs accounted for $1 in every $5 of venture capital funding globally in 2021. They’re taking the world by storm thanks to the more accessible, customer-friendly approach to handling finance. And this has created huge competition for banks and other, more traditional financial institutions. To better compete, these FIs need to adapt some of the traits of fintechs—like the dedication to customer experience.
“Traditional banks must be forward-looking and determine what kind of competitive offerings fintech companies are deploying to maintain and recruit customers,” writes Emmanuel Dooseman, Global Head of Banking and Partner at Mazars. “In order to successfully adapt to the times, traditional banks should focus on improving their customers’ experiences to successfully align with their needs and expectations.”
Small Business Relationship with Big Data
Certainly, your financial institution can use its small business clients’ data to increase its own success. But how does that translate to the customers in question?
In addition to the smoother customer experience we already discussed, your access to their real-time financial data would create insights that enable your SMB customers to:
- work more efficiently,
- make better business decisions, and
- gain an advantage over competitors that don’t have access to similar data.
However, small business owners may hesitate to share the information required to get these insights, due to a lack of clarity on the data management and data protection policies in place.
Evidently, though, businesses are interested in the benefits that come as a result of such financial data collection.
“Our latest research findings reinforce the message we keep hearing from small businesses across the country: They want better access to innovative, secure financial technology to take control of their finances, access new capital, and succeed,” Darrell MacMullin, Senior Vice President of Products and Platforms at Mastercard Canada, said in a 2023 press release.
Businesses just need to feel more confident in their understanding of what is being shared—and with whom.
How to Collect Small Business Customer Data
No question, correctly leveraging SMB financial data analytics can set both your FI and your SMB client up for huge success.
The right tech helps. Your clients are using different tools to keep track of billing, payments, ledgers, taxes, and the like. Boss Insights offers a universal API that facilitates connections with over a thousand different pieces of financial software, including accounting, payments, billing, e-commerce, and more.
Simply have your client plug their data sources into the portal and you’ll both have a clear picture of their business health and a wealth of actionable insights at your fingertips.
And for those who might be hesitant to allow ongoing monitoring of their financial data?
Non-profit industry standards body, FDX, has created the SMB Task Force to tackle creating the trusted standard essential to build SMB confidence in sharing data and unlocking the benefits. Boss Insights’ own CEO, Keren Moynihan, is co-chair of this task force, meeting monthly with leaders from FIs and fintechs across Canada and the United States on these issues.
Interested in learning more about how Boss Insights can help your financial institution and its SMB customers? Fill out the form below for more information or try it now for free.