Information for Financial Institutions

Cater to the small business climate

Help your customers navigate financial uncertainty.

Deborah Sweeney

By Deborah Sweeney

Though the small business climate is uncertain, it's not stagnant. Both startups and well- established small businesses have immediate needs and financial institutions are well-positioned to meet them. Financial institutions that cater to the small business climate through consolidated offerings have competitive advantages: They're attractive to small businesses that are seeking simplified solutions to common problems. The first step is to understand current SBO needs.

What startups need right now

With the actual timeline of recovery unknown, startups are seeking more than checking accounts and funding: They need help getting their ideas off the ground and preparing for success. One common disconnect in the account setup process is the EIN (Employee Identification Number) process. New business owners often come to their FI eager to set-up accounts only to find they're sent away to get their EIN. This number is necessary for getting things moving for the new business owner but once that account holder leaves the FI, that branch stands to lose that account holder to another FI or even a fintech who offers that service. As trusted advisors, FIs can instead help account holders apply for EINs on the spot; in doing so, this branch expedites the account setup process and fosters a new relationships, one that can have lifetime value.

Once a business has an EIN, they are many other additional services FIs can provide them. For example, many startups are interested in tax management services to maintain legal compliance. Some need trademark and copyright advice, and others need logos, website design and marketing services. Financial institutions that recognize such opportunities can go beyond business checks and partner with providers that empower financial institutions to service a bevy of startup needs under a single roof.

What established businesses need right now

FIs are similarly positioned to help established businesses maintain operations and continuity as the economy rebounds from the coronavirus crisis. Rather than seeking startup funding or help getting off the ground, existing businesses need trusted financial partners who can help them weather the storm.

Financial institutions, then, can help small businesses obtain funding via government programs such as the PPP, traditional commercial loans and lines of credit. Financial institutions can also help alleviate financial strain by offering mortgage, commercial loan and credit card forbearances.

Like startups, the potential for financial institutions to service established businesses doesn't begin and end with checking accounts and funding. This is a time when financial institutions can package services such as treasury management, payroll, tax services, marketing and financial advisement into consolidated products that simplify operations and have the potential to save small businesses money. Consolidated offerings allow SBOs to focus on survival and growth, and bundled services achieved either in-house or via strategic partnerships enable financial institutions to boost revenue through value-added products.

How to Win Against Fintechs

Next: Compete and Win Against Fintech

As if competing against other FIs isn't enough, today's financial institutions face significant competition from fintechs, startups that woo account holders with provocative pitches.