05/24/2018

How Can Community Banks Sail Through Growing Pains?

Chas Puleo May 24th, 2018

Community banks want big-bank budgets for new capabilities. Big banks want that community-bank feel for their customers. Which of these banks has the more difficult climb?

My Unique Findings at an Incredible Community Bank

Their small branch that once sat on a dusty road with little traffic now occupies the epicenter of a community that has grown exponentially. The bank’s market share is through the roof. New homes have literally sprouted up around them as if the soil had been fed super-charged housing fertilizer. This pattern of growth has occurred around several of their branch locations. In turn, they have inherited many new customers of all shapes and sizes. Individual consumers, local businesses, and large corporations alike are all knocking down the branch doors.

This is enough to make the board members smile ear to ear as they dial in for the quarterly call.

But on the other side of this significant influx of opportunity were many vital questions that needed to be addressed.

What is this bank’s ability to fulfill the requests of a diverse customer base, or more specifically, the needs of large corporate customers and prospects? Suddenly this great problem to have had turned into an elephant’s weight of pressure on the team to win these opportunities.

Up until this point, the bank had done a remarkable job of patch-working their way to makeshift treasury solutions for these customers. But each new solution request comes with its own set of unique requirements, and building an in-house one size fits all solution is neither possible nor sustainable.

The effort to create a treasury management system from scratch put tremendous strain on their internal resources, resulting in an ROI that was negligible to nonexistent. It was at this point that I was originally contacted. I was called in to consult with a potential large client that need an advanced solutions system to handle their corporate needs. It ended up being that the opportunity I was called in to assist with was the final straw that resulted in the bank being pushed up against the walls of their sandbox. There weren’t enough spare parts in the back room to rig a legitimate solution capable of compelling this large corporate prospect to leave their big bank.

To win this customer and continue to serve future customers in need of more robust solutions, this community bank would need to adopt a different strategy.

How We Found an Alternative to Best Meet Their Corporate Customers’ Needs

It’s no revelation that technology is changing every day. Your smartphone is already irrelevant. Maybe you just started making AT&T Next payments.

The same technological advances are happening right now in the treasury management field. New innovations are being applied to existing treasury management solutions while you eat your lunch. It will only become increasingly more difficult and costly for smaller financial institutions to keep up with the advancements in technology happening all around them.

But just because the winds of technology are changing so rapidly, and the cost of sails are rising doesn’t mean community banks can’t chart a new course for the docks loaded with waiting customers. They just need a business partner that can help tug them in the right direction and provide a map for this new technology-rich environment.

Fintech Partnerships Give Growing Community Banks a Path to Success

Fintech partners enable community banks to keep pace with the latest technology changes. Contrast that to the task of transforming outsider perceptions that larger banks typically have a frostier cultural feel, and the scale tips favorably to the community bank.

The right partner, with the right technologies, at the right time, can get a community bank off the bench and in the game almost overnight. For example, many large financial institutions have started to outsource their lockbox offerings in exchange for immediate access to cutting-edge capabilities and significant time and cost savings. Outsourcing can free up a tremendous amount of time for community banks that are running out of bandwidth to keep up with new upgrades and security patches.

Sometimes, one solution implementation can be all it takes to convince a very large commercial customer to jump ship and swim towards a financial partner that offers the best of both worlds – big bank capabilities and a community bank-feel.

“They just need a business partner that can help tug them in the right direction.”

In the end, these financial institutions can either take their customers to where they want to go by adapting and evolving or let them jump ship for that shiny new vessel glistening on the horizon. Can you imagine where you could redirect the resources assigned to these tasks? Can you imagine the savings? Can you also visualize your prospect’s eyebrows lifting curiously when you say “Yes, we can do that!”?

Saying yes to new capabilities can power the ship and get it heading in the right direction.

Can you see the docks? They’re loaded with customers.

This content is accurate at the time of publication and may not be updated.