Nearly every business (99.9%) in America is a small business, generally defined as an independent business with fewer than 500 employees, with 89% having 20 employees or fewer. That totals over 33 million businesses employing 61.7 million Americans. With these numbers, you might think the engagement lines between small businesses and financial institutions would be strong.
And yet, there is a noticeable gap between small businesses and the financial institutions that serve them, including community banks, regional banks, and credit unions. This gap negatively impacts small businesses that require access to financial services if they want to thrive. It also hurts community and regional banks and credit unions. These financial institutions could benefit by getting more deposits from small businesses and building deeper relationships with existing customers and members to increase their profitability and balance sheets.
Understanding the Engagement Gap
The gap between small businesses and local financial institutions primarily stems from a fundamental lack of transparency and understanding. Many small business owners don’t understand the differences between financial institutions and instead assume all banks are the same. They often mistakenly believe it doesn’t matter who they work with and see switching financial institutions as an unnecessary distraction.
If financial institutions can demonstrate real value to a small business, there is a lot of opportunity to win accounts and pull from competitors. Yet, their most significant blind spot is market-driven risk and opportunity. Researching the market and performing outreach takes time and resources. Currently, most available tools only offer generic business insights instead of more definitive data points that can open meaningful dialogues between financial institutions and small businesses.
As a result of this engagement gap, small businesses struggle to access quality, relevant products and services that could help them build their businesses. Meanwhile, financial institutions miss out on significant growth opportunities that can result from getting more deposits and forming long-term relationships with customers.
Closing the Gap
Closing the engagement gap would empower financial institutions to target small businesses more effectively. Starting conversations on a deeper level based on an intimate knowledge of their business can instantly build trust and allow the financial institution to be proactive in the relationship. It can also enable financial institutions to reduce risk by including market drivers in functions such as underwriting and portfolio management.
At the same time, closing the engagement gap would help small business owners access the financial services and products they need from someone they trust. They could start building relationships with a community bank or credit union that understands their business needs and is committed to working with them for the long term. This type of relationship is what builds strong businesses and communities.
Crux Analytics is closing the gap with targeted data that allows financial institutions to start informed conversations with small businesses, knowing their risk factors, growth opportunities, and roadmap. A financial institution armed with this type of intimate knowledge can instantly start advising a small business on the best products and services available to meet its needs. This can demonstrate immediate added value to targeted businesses and serve as the foundation for a long-term relationship.
How Crux Works
Crux’s technology retrieves the most accurate and relevant data about a small business. It then contextualizes that data into an easy-to-read format for financial institutions to drive immediately actionable insights based on quantifiable risks and opportunities.
While other tools can help gather location and industry data, Crux remains the only company capable of delivering targeted data about any business, regardless of size. It provides a complete picture and accurate context, whether the business is brand new or decades old. Its platform is dynamically tailored to align with each financial institution’s existing portfolio of small businesses and segment growth goals.
In addition to helping individual small businesses, having detailed insights into the unique needs of local businesses can help financial institutions determine which products and services they should offer to serve their small business community. This might include flexible loan products, lines of credit, and cash management services tailored to the cash flow patterns and financial challenges that small businesses often face.
Ready to Close the Engagement Gap?
The first step toward bridging the gap between small businesses and community financial institutions is recognizing that it exists. The banks and credit unions that actively seek to close it will be the ones who benefit most from forging meaningful relationships with small businesses within their communities. Leveraging the technology of Crux Analytics can make it easier to start conversations and offer products that fit the unique needs of individual small businesses.
Ready to get started? Let’s talk
Comments