Independent Banker - May 2020 - 24

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small businesses paying consumers (such as refunds, promotions
and payroll) and small businesses paying other
small businesses, or B2B payments.
Expand customer relationships
In all instances, relationship banking holds the key for community
banks to identify ways to expand opportunities for
small business customers.
New technology provides a depth of client knowledge as
advancements in artificial intelligence (AI) help bankers
individualize customer solutions. From chatbots to tailored
offerings in apps, by the end of 2020, forecasts suggest that
the use of AI in the banking industry will generate around
$78 billion in value globally.
How to maximize the potential
of payments
" Community banks are small businesses' most
important source of capital, " according to the
U.S. Small Business Administration (SBA). As the
financial institutions that provide more than 60%
of all small business loans, community banks fuel
entrepreneurship.
But the opportunity exists for community banks
to expand their small business relationships by
offering payments solutions. Statistics reveal that
only 3.3% of small businesses currently look to
business credit cards from banks to support their
expansion, highlighting growth opportunities.
Small businesses seek payments solutions.
Businesses rank financial software, including
bill payment solutions, as a top priority for their
technology budgets.
Small businesses are already looking to their
banks for these solutions. More than two-thirds
(70%) report they receive merchant services
from their primary bank, and 59% report that
they are most likely to get advice from
their bankers.
" Community bankers are in
a great position to get in the
conversation and guide the
small business to grow, expand
or improve, " says Preston Kennedy,
president and CEO of Zachary Bancshares, Inc. in
Zachary, La. " The thing to remember is community
banks are small businesses, so we have practical
experience, as well as advice, to give. "
Preston Kennedy
But, despite community bankers having a deep understanding
of their customers, not every small business
banking relationship turns out rosy. Small businesses can
be risky customers. Almost 400,000 small businesses closed
in 2016, nearly the same number that launched, according
to the most recent SBA data. But for community banks, that
established relationship offers the potential to minimize
losses-both to the bank and to the business itself.
" When you bank a small business customer, if they've got
a problem, you've got a problem, " Bolton says. " Having that
relationship allows you to assist them in overcoming their
challenges as they come up. "
In addition to addressing issues, the connection a community
banker has with their customer can lead to new
banking relationships.
" We had a business banking customer who was a single
member LLC with two or three employees, " Bolton says.
" He ran a fabrication business making repairs to log trailers.
He wanted to start making his own type of trailer, and
he needed a specialized line of credit to bridge the cash flow
gap. We're not big asset-based lenders, but we were able to
work with him from knowing his other business and looking
at his financial picture from a global perspective. He
was able to triple his business output just from that line
of credit. "
And that's what community bankers strive to do: identify
opportunities to help the communities they serve.
" Sometimes it's the young family that we did their home
loan or they had their checking account with us since they
were in high school, " Kennedy says. " So, when they come
up with a business idea, we're the natural first choice. When
we have a relationship, that covers a lot of the spectrum. We
can handle just about every need that a person who lives in
our community might have. "
Colleen Morrison is a writer in Virginia.
24 Q ICBA Independent Banker Q May 2020
Independent Banker - May 2020

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