Independent Banker - May 2019 - 60

Partnering
for Success
Community banks must look to partnerships to deepen
relationships with their small-business customers
Community banks must think diff erently about how they
engage customers-deepening relationships through more
contextual communications via the channels preferred by
both customers and the small businesses in their communities.
Many
community banks may struggle to fund the technology
that's needed to attract and retain customers who are
increasingly favoring digital services over branches today.
Instead of nearby branches with limited hours, new generations
of consumers equate convenient access with digital,
easy-to-use products that enable them to connect to their
funds from anywhere, at any time.
Achieving greater operational eff iciencies to fund technology
is critical for survival. However, community banks also
must find ways to boost revenue in profitable ways. For too
long, community banks have waited to act, while big banks
have cherry-picked some of their most profitable business.
What small-business customers value in
payments partners
FIS and market research company Psyma recently conducted
a survey with a cross section of financial decision-makers
in businesses to understand their views about payments
and payments providers.
The majority (51 percent) of financial decision-makers reported
that the most important service off ered by a payments
partner is merchant processing that enables them
to accept payment cards. Indeed, the ability to accept a
variety of card payment types is now table stakes for merchants,
and the need will only grow as the use of paper as
a payment method continues to dwindle. The sample in this
survey is skewed toward smaller businesses, with 51 percent
of represented companies in the sample reporting less than
$5 million in annual revenue, while only 21 percent report
between $5 and $25 million in annual revenue.
The community bank sector continues to see consolidation
as a path to accessible tech and operational eff iciency.
Even regional institutions are driving scale, citing the need
to spend more on the technology necessary to compete
as the reason behind their recent merger announcements,
meaning the number of commercial banks continue to decline.
As evidence of this consolidation, recent data from the
Federal Deposit Insurance Corporation (FDIC) shows that
the number of commercial banks went from 12,343 in 1990
to 4,715 in 2018.
Gaps in off erings prevent optimizing competitive advantage
Community banks have always enjoyed the competitive
advantage of knowing their small-business customers on a
personal level. In turn, small-business owners want a banker
who understands them. They report the highest satisfaction
levels with community banks-80 percent versus 61 percent
for large banks, according to the Small Business Association.
However, gaps in what community banks can off er
often prevent them from fully leveraging their competitive
advantage and owning the total financial relationship.
Partnering with FIS enables community banks to transform
their operations in order to become more holistic providers
to the small-business owners they serve and fill the gaps
needed to attract other small businesses.
Independent Banker - May 2019

Table of Contents for the Digital Edition of Independent Banker - May 2019
