An Organic Approach to Grow Small Business Banking

organic growthIn the years following the mortgage crunch, many financial institutions large and small hoped to make up ground through small business lending. The motivation to grow small business banking continues to swell, even as the economy rebounds. No wonder. As BAI Research has demonstrated, “when it comes to institutional loyalty and share-of-wallet, small businesses rank among the best customers a [financial institution] can have, making them well worth the extra effort to serve.”

The process to grow small business banking can vary widely based on an institution’s infrastructure and the unique behaviors of the communities they serve. But one strategy holds true no matter the circumstances, and is entirely under-utilized: formulating a meaningful relationship that has nothing to do with your sales, lending, or banking.

Go Beyond Old-School Networking

Granted, there are some tried-and-true approaches along these veins: participation in the chamber of commerce, sponsoring significant community events, and so on. But everyone knows “networking” is a primary reason for this participation in the first place. The key is to not just be in the same room as small business owners shaking hands, but to explicitly add value for them and their businesses — and be genuine in your desire to do so.

Flip from your institution’s viewpoint to that of the small business owner (SBO), and this is an organic approach to grow your small business banking. From their viewpoint, they’re already benefitting from you outside of their banking needs. When they do have new needs—a business loan, cash management, streamlining payroll – they’re likely to wonder what you can bring for them given your proven value, even over an existing relationship.

OK, great concept. But how? Your days are likely busy enough without altruistic ventures for SBOs that aren’t even your customer right?


Tap Into Your Community Roots

Richwood Bank in Richwood, Ohio, upped the ante on their support of “Buy Local” campaigns, which are catching wind in communities nationwide. Richwood Bank offers the Buzz Points debit card reward program that awards their cardholders more points when buying local. This program drums up sales for the SBOs, who associate the new business entirely with the financial institution’s cardholders.

From there, Richwood Bank uses this as an “opportunity to start a conversation with small businesses,” explains Chad Hoffman, CEO of Richwood Bank.

“We can go to local business, even those not currently banking with us, and address their marketing needs with an affordable, trackable solution with proven success,” Hoffman continues. “This is a differentiator for our business and keeps us partnering with them month over month, solidifying a long-term relationship.”

Play Matchmaker

Perhaps your reward program doesn’t include this “buy local” component yet. No problem. Adding value can be as easy as leveraging your existing relationships to play matchmaker. Take notice of local businesses and think of their suppliers or vendors – some of which are likely your clients. For example, you’re eating at a restaurant and notice they have gluten-free pasta. One of your clients happens to be a wholesale bakery that mills their own flours. Turn the restaurant on to this supplier.

If you can save an SBO money on supplies and/or improve their product quality by introducing them to a new vendor, you’re a hero. Of course you’re also adding value to your existing client by giving them a new customer. But think beyond your own portfolio even. Your intimate knowledge of the local business environment is your greatest asset. Even if neither party is an existing relationship, you’ve now benefitted two SBOs by playing matchmaker based on your knowledge.

Bottom Line

These are just two examples of how to add meaningful value to non-customers. Get creative and brainstorm other ways your institution can do so. A key component is to be genuine. Sometimes the effort might not yield a new business relationship, and that’s OK. Helping local businesses is never a bad thing. And if you don’t believe in karma, you should certainly believe in institutional (aka, “brand”) reputation.

As for the instances that eventually do yield a new relationship? The effort is well worth it. Share-of-wallet is 65% for small businesses (significantly higher than personal accounts), and SBOs report being with the same primary financial institution for over 15 years.1


This article originally appeared in CB Insight & CU Insight.

1BAI, “Turning Small Business Into Big Business,” 2013

Dante Dominick

Danté Dominick is an award-winning marketing and content strategist with specialized knowledge for the financial services industry. He has helped over a hundred community financial institutions improve their image, creative assets, user experience, and content – and looks forward to the next hundred!