Treasury Management

TREASURY MANAGEMNET FOR SMALL BUSINESS

Small business is the hot new trend in SuperCommunity Banking. Small businesses borrow more from community banks than from larger ones, and over 40 % of them consume at least seven financial services products. This is an ideal segment for community banking focus, and even the mega- banks have an eye (and, often, a dedicated sales force) on this segment.

This is why I am particularly puzzled at the lack of Treasury Management’s (TM) attention to small business. Gary Radon’s study shows year after year their interest in and use of TM services. Even micro-businesses under 贄ꯠ in sales often use payroll services, and, of course, checking accounts. Yet our product line and general marketing are lacking when it comes to this segment.

Product line is not suitable. We use big guns to service small business. Many banks have the same analysis product for corporate America and for the ũ million annual sales company. Similarly, Remote Capture devices are often identical, while one needs to process 2000 checks a day, and the other under 30 checks a day. Pricing follows, which makes many TM products prohibitively expensive for the small business.

Overhead too high. Sales, service and maintenance for small business are performed by the same staff that sells, services and maintains larger TM clients. With such overhead, the segment can’t possibly be profitable. We need to identify more economical ways to take care of the small business customer.

Internal conflict at Product Management between market segments. Most product management dollars are stacked against larger companies. Product and channel innovation for small business gets lesser attention and resources, and often involves minor tweaks to the corporate product line. Even marketing rarely goes beyond the usual business checking annual campaign. The result: those who can’t “cut” it in the commercial banking world end up serving small business. Consequently, the resources stacked against this segment are limited and sometimes not very effective in handling this segment.

New sales channels. TM products are generally too complex to be sold by the retail sales force. However, small business products should be simple and easy to understand, as is appropriate for a less complex set of needs. An effectively structured small business TM product line can be sold through the branches, with some support from ".

I am not suggesting that every person in consumer banking sell TM products. Rather, much like the sales of annuities, mortgages and other more complex products, a certification program for those who are truly interested and capable of selling this product line is appropriate. 20% of the sales force will then sell 80% of the products, which is fine.

One more point though: certification is a privilege, not a right. Those who do not earn it by achieving a minimum level of sales should lose their re-certification opportunity for a meaningful period of time before they become eligible for it again.

New service channels.Most banks install their remote capture devices in person. It is part of the service differentiation, they say. But if the product is simple enough, phone installations can and should be effective and personal. As a part of a comprehensive approach to selling TM services to small business, consider establishing a small cadre of phone bankers who can walk small business owners through the installation of their simple RDC device, and possibly even cross-sell them additional products in the process.

New maintenance channels. Small business owners love mobile banking. They often behave like consumers, and mobile banking is the fastest growing access channel we have. There are plenty of vendors selling mobile banking applications. Find out what are the top five requirements of your small business customers and meet those needs through mobile banking and a simple (but not purely consumer-oriented) online presence.

My message is simple: simplify. Build an appropriate product line, delivery channels, sales force and maintenance crew for the small business treasury management customer. Make selling and servicing this segment economical. You can certainly add a high-end anchor for your product suite aimed at this segment, but start with the masses. You already have the presence, brand, community identity and trust. Leverage those and SOME of your current distribution to build an effective small business deposit gathering strategy.