Small businesses need you – three ways to attract and retain your community’s businesses

Small businesses need your business as much as you need theirs. Since the advent of the modern banking system, small business owners have relied on regional and community financial institutions (RCFIs) to help them start their businesses, grow their businesses and maintain their businesses. In fact, as recently as 2013 RCFIs accounted for approximately 75% of all small business loans in the United States.

Since then, however, the ranks of RCFIs have continued to decline, mega banks have proliferated, and alternative lending sources such as Lending Tree, Quicken Loans and the Lending Club have provided entrepreneurs yet another source of funding to compete with RCFIs’ share of the small business market. And that’s to say nothing of the myriad non-traditional financial services providers offering innovative payments and digital banking solutions to small business owners.

Fortunately, in spite of the multiple forces working against RCFIs today, this fact remains: small business owners prefer to bank locally. They understand that the relationships and local insight of RCFIs is invaluable to them and their businesses, and something the mega banks and others competing for their business simply cannot provide. But in an ultra-competitive environment, with a seemingly infinite number of options available to small business owners, what can institutions like yours do to continue earning their business? Below are three best practices sure to increase your odds of winning the battle for small business market share in your community.

Invest in Technology

A no-brainer if ever there was one, right? You’d think so, but the reality is that consumers view the mega banks as technologically savvier than their RCFI counterparts because their websites, in many cases, are better; i.e., they look better, are easier to navigate and display equally well on mobile devices. So the first order of business for RCFIs looking to compete for small business clients, or any account holders for that matter, is to update their website. A fresh, modern looking website, that renders equally well on a mobile device, will significantly increase your odds of converting a website visitor into a new client.

Speaking of mobile devices, a survey conducted by ath Power Consulting found that nearly 70% of small business owners would switch banks in order to partake of better mobile banking services – 70%! Your typical small business owner isn’t generally sitting behind a desk all day; they’re hustling to generate new business, take care of existing clients and manage the day-to-day affairs of their company. Providing them a tool that enables them to deposit checks, transfer funds, authorize wire transfers and manage their cash flow while on the go is an invaluable service, one they’re more than willing to pay you for; as much as $100 a month, according to the Aite Group.

Become a Resource

Sir Francis Bacon is credited with coining the phrase, “Knowledge is power.” If ever there was a group this sentiment applied to it’s small business owners. As a RCFI you’re better positioned to provide the knowledge your local business owners need to be successful than arguably any other source they could tap. You’re privy to local housing data, commercial loan data, local zoning data, employment data and much more, all of which are extremely valuable to area entrepreneurs and small business owners. Positioning your institution as the subject matter expert on all things small business related is one of the smartest moves you can make.

As local business owners, and prospective business owners, begin utilizing the information you provide, something magical happens: trust forms. Whether the partakers of the information you provide realize it or not, you have become a trusted resource to them. A phenomena that is particularly powerful with business owners whose accounts you don’t yet hold; i.e., new business. It may take longer for some than others, but eventually they’ll think, “Wow, if this FI is willing to provide all this valuable information to me when I’m not even a client, what would they do for me if I were a client?” Become an invaluable resource to your local business community, and they’ll reward you with their business—guaranteed.

Market Your Wares

“I would’ve used my local bank for everything, if I would’ve known they offered it.” Those are the words of Chris, a small business owner who operates a mobile coffee service in Austin, TX, when asked why he doesn’t use the mobile business product his local bank provides. A sentiment all too common among small business owners. The same ath Power study cited above produced one particularly tragic finding: in 839 in-branch visits by prospective small-business customers, nearly 40% of bankers failed to mention the mobile banking services they offered. The savviest consumer in the world can’t buy something they don’t know about. To gain more business clients, you gotta tell ‘em about all the great business products and services you have to offer them, and what those products and services will do for them.

Which really isn’t difficult, and dovetails nicely into point number two about positioning yourself as the small business subject matter expert in your community. Billboards, radio, print ads and statement stuffers will likely always have a place in your marketing budget, but there are other, more effective means of getting the word out, which also happen to be less expensive and serve to position you as the invaluable resource you’re aiming to be. Examples, in no particular order, include: creating a business resource center on your website, chock full of valuable small business related info; producing a small business blog, where your in-house commercial loan officers and others can provide valuable tips and information; host workshops or seminars in-branch where small business owners, and aspiring small business owners, can learn about things like managing cash flow, accessing lines of credit and how the commercial loan process works; spread the word via Twitter, Facebook and other social media outlets; and last but not least, educate your front line folks on all the valuable products and services you have to offer small business owners.

Conclusion

It’s no secret in banking circles that business banking clients are a good thing. They maintain higher balances, are more willing to pay for products and services than retail account holders and the relationships you build with them result in greater lending opportunities. What doesn’t appear to be as widely known, however, is just how badly business owners need you. They need your technology, your expertise and your support. By investing in the tools they need, becoming the resource they need and making them aware of both, you will absolutely grow your business, their business and strengthen the communities you both serve in the process.

User experience: What is it and why all the hype?

“Experience schmicksperience.” There is no doubt in my mind that this phrase has been uttered, or at least thought, by many a banking executive in response to a member of their staff expressing the need for an improved online account holder experience. Yours truly has witnessed a few such reactions first-hand. As one who believes strongly in the value of a quality user experience for online banking users, I’m hopeful that a fairly recent event will convince the skeptics who disregard user experience. But first, what exactly is user experience?

 

According to the Nielsen Norman Group—pioneers in the field of evidence-based user experience research, training, and consulting—user experience (UX), “…encompasses all aspects of the end-user’s interaction with the company, its services, and its products.” Carrie Cousins of Design Shack—an online locale that covers all things web-design related, defines user experience as “…how a person feels when interacting with a digital product.” Cousins adds that UX encompasses many other factors, including but not limited to: “…usability, accessibility, performance, design/aesthetics, utility, ergonomics, overall human interaction and marketing.”

 

While some folks find it necessary to distinguish between usability—how things work— and user experience—how things feel, most lump the two terms together when discussing the totality of an end user’s digital experience. Plainly put: user experience concerns how things look, feel, and operate. This concept tends to be abstract and difficult to quantify, which is why it doesn’t fit neatly into the CFO’s spreadsheet. It’s hard as heck to quantify it; hard as heck to truly appreciate; and hard as heck to sell to bankers who are already paying a bunch for their digital channel efforts every month. So how did it become such a big deal, and why all the hype? Believe it or not, there’s science behind it.

 

One of the earliest and most interesting studies around UX was conducted by the UK Design School between Dec. 1993 and Dec. 1994. Researchers tracked the share prices of publicly traded companies who had won awards for their focus on design and UX, and then compared them to various indices such as the FTSE 100 and the FTSE All Share index. They found that the design-focused companies out performed all others by more than 200 percent. And that was over the course of a five-year bear market, a three-year bull market, and the beginning of the recovery in 2003; the superior performance of the design-led companies persisted throughout.

 

Intrigued by the findings of the UK study, in 2006 researchers in Canada created a UX fund of their own, comprised exclusively of companies well-known for their UX prowess, such as Google, Apple, and Netflix, and promptly invested $50,000. Their original plan was to sell after one year, but when they realized a nearly 40 percent return in year one, they simply couldn’t sell; four and a half years later, the fund had matured 101.8 percent! These two studies kicked off a wave of UX studies around the globe, as more and more business leaders began to grow curious. U.S.-based Watermark Consulting conducted a study from 2007-2012 that found that the top ten leaders in customer experience—based on Forrester Research’s Annual Customer Experience Index— outperformed the S&P with close to triple the returns, at a cumulative total of +43 percent. In spite of a growing mountain of evidence in support of UX investment, skeptics remain.

 

Which brings us back to that “fairly recent” event I referenced earlier. On Oct. 2, 2014, Capital One– yes, that Capital One– acquired San Francisco-based Adaptive Path. Why was this so significant, you ask? Because, Adaptive Path and the folks they employ are considered by many as the gurus of UX. The huge-font verbiage that adorns the Adaptive Path corporate home page makes it very clear what they do and what they believe: Great businesses are built on great experiences. We make those experiences happen. If you explore their website further, you’ll encounter such statements as, “When Adaptive Path was founded (2001), UX (user experience) firms didn’t exist…” Not only are they the gurus of UX, you could also say they invented the space. And Capital One just acquired them – lock, stock, and barrel. If you’re someone who provides financial services to consumers and you haven’t been taking all this UX stuff seriously, it’s officially time to begin doing so–others are taking it very seriously. It can mean the difference between winning and losing.

Words Have Meaning…Names, Power

The Patagonian Toothfish proved to be so popular that several years ago there was concern the species was on the verge of ecological collapse. How is it possible you’ve likely never heard of this fish, yet enough of it is sold and eaten each year to threaten its viability? The ugly creature was remarkably unpopular until it was marketed under the more attractive and exotic name, Chilean Sea Bass, by an enterprising fish wholesaler.

 

Everything from fish names to product and feature titles is responsible for creating powerful first impressions for consumers. Based on consumer impressions, products and features either experience widespread adoption or massive failure. Specific to financial services, here is a more concrete example: Mobile Remote Deposit Capture. If you’re a banker or commercial client, this is a great name for taking a picture of a check and depositing it remotely, versus driving to the local branch. However, if you’re a consumer, this is jargon. Taking high-value business-centric features like the remote capture of a check for deposit to consumers is a great way to create a high-value, self-service workflow. However, the packaging and naming must create logical connections and context associated with the features. Essentially, you have to create a brand around the feature for consumers to connect with and embrace.

 

The more complex the function, the more important it is to create an intuitive message about the what and why of a new feature. Without establishing a relatable name, value proposition and brand, consumer adoption and satisfaction of valuable workflows and features are likely to lag. Naming, branding, and complexity are key elements to consider when delivering business services to consumers in ways that delight, rather than frustrate them.

 

Products and services are named with the same goal in mind: to say something about the product that a lengthy explanation cannot. Easy Deposit is a tremendously popular name for Retail Mobile Remote Deposit Capture because it communicates the benefits of the feature. The emphasis is on the function (deposit) and the benefit (ease). The value proposition is built into a simple name that provides the context for use and a promise of why consumers should care.

 

The second key component of bringing a business-oriented service to the consumer space is to think about the complexity of the task required to achieve the result. Transfers from a locally held account to an account at another financial institution via online or mobile banking are typically fulfilled via the ACH network, but not presented this way to retail customers. Given the lack of familiarity with ACH processing, a feature called ACH payment would be confusing. Therefore, further exploration for a name that creates context for consumers is vital for success.

 

Beyond the naming, this feature’s adoption benefits by reducing the choices of how the transfer is made, as well as the complexity required to set it up. Rather than a model in which end users create a recipient and bind an account triplet (ABA, account number, type) for the external account, the workflow for identifying the target account is simplified and broken into multiple steps, each step with an explanation of the required data and how to obtain it. Addressing the how in this case will prove as valuable to consumer adoption as addressing the what,demonstrating the power of fusing naming conventions and technology.

 

Finally, in this particular example, careful consideration of the entry point for this feature, which is often the transfer menu item, should be considered. The typical distinction between an internal funds transfer and an external ACH-fulfilled transfer is likely hidden or invisible to consumer banking customers. After a self-service linking process (often involving micro deposits), the external accounts should be presented alongside the account holder’s internal accounts as options for transferring funds.

 

Packaging, including naming and reviewing workflows, will greatly influence how consumer banking customers will perceive the value of business features or services.  Creativity and workflow review will make the difference between success and failure.  Ensure the features and benefits are easy to discover, use, recall and share. Ultimately, a well-packaged feature may require significant effort to repackage and market, but without this effort, business features are likely to live in obscurity – like the nearly forgotten Patagonian Toothfish – rather than embraced and adopted by millions.

 

This article was originally printed in the September/October 2014 issue of Western Banker magazine.

Choose Your Partners Wisely

The tendency for humans to try and do everything themselves is as old as time. Whether it stems from a desire to reap all the glory, a lack of trust in others, or simply a failure to consider asking for help, it’s been the downfall of many. In the words of Inspector Harry Callahan, “A man’s got to know his limitations.”

At Q2, we create great software – that’s our forte – in the form of a virtual banking platform that strengthens communities by strengthening the financial institutions that serve them. We do not build ATMs, design firewalls, provide core processing, erect data centers, or do a slew of other things around which entire companies are built. For these reasons, choosing the right partners is critical to our success – and yours. As Lou Senko, Q2’s Vice President of Information Technology says, “We like to think of our trusted partners as part of the magic that happens behind the scenes. Their technology is a key foundation to some of Q2’s future capabilities underneath our product offerings.”

EMC is one such trusted partners for us. Who do you consider your key partners? Tweet them some appreciation and include #Q2partners.

Are We There Yet?

Well, the Marketing Kings of the Universe have done it again – pushed much of the world into a tizzy. Picture it… CEOs texting their charges at dark-thirty in the morning asking, “what are your plans”; relationship managers and customer service reps checking their email every five seconds to see if their talking points have arrived; product development folks wiggin’ out in a frantic we-must-get-our-hands-on-the-SDK-or-die fervor; and citizens of the world buying up every last one of the Cliff Bars and Vitamin Waters in preparation for their strip-mall-sidewalk camp outs!!

You probably guessed what I’m talking about. Apple’s BIG iOS 8 and iPhone 6 release. As with Michael Jordan in the waning seconds of a game, the weather in Seattle, or the dysfunction in Washington, the question remains: Really, this, again? And not only again, but touted as being ‘bigger than ever’?! Truly, you know it’s a big deal when an eleven-year-old girl who has spoken of her “first phone” since about age five says, “Dad, I know you and mom would get me the iPhone 5 for my birthday, but I’d rather wait a month and get the iPhone 6.” Let’s not even address how the armor-hewn shroud of secrecy surrounding the Announcement Event has fed the hysteria.

Hyperbole aside – it is a big deal, especially the iOS 8 release. Here’s why. The ripple effect of Apple’s forthcoming operating system will affect a wide swath of humanity. Developers really do need to know what impact these advancements will have on their apps; companies whose customers rely on these apps really do need to know how their end users might be impacted; and customer service reps who support the users of said apps really do need to know how to answer questions around them. Preparation is indeed in order.

At Q2, we’ve been diligently preparing and anxiously waiting along with the rest of the world, trying as best we can to put ourselves in the shoes of our customers, and our customers’ customers. I’d venture to say these preparatory efforts have touched every corner of our company – from the CEO down. I’d also venture to say – at great risk I realize – that we’re as prepared as we can be. We’ve studied the impact from every conceivable angle, considered all potential participants, and reflected ad nauseam on the lessons learned from the iOS 7 release.

We also know that we can’t possibly account for every conceivable variable under the sun—and  we are in good company. In August 2010, Microsoft released 14 security patches in one day, to address 34 vulnerabilities. And in 2005, Oracle released 88 patches for security vulnerabilities over a four month period – that’s 22 a month! The point being, it ain’t easy. You can have 128,000 employees and more resources than Solomon and still not get things right.

But, we have a great advantage. Armed with a virtual banking platform intentionally constructed to accommodate change, and the knowledge that, even in a worst case scenario, no lives will be lost, we have confidently awaited the big day. That being said, we apologize in advance to the Inupiaq fisherman with no thumbs for the slow load times in the Beaufort Sea and maybe the placement of the navigation buttons on the ATM locator page. Glitches aside, we are ready and see this as another opportunity—one that may transcend any product release—to prove our commitment to partnership.