Banking on Digital Growth
Banking on Digital Growth

Episode · 6 months ago

145) #ExponentialInsights: Running an SMB Is Hard Work — Banking Shouldn’t Be

ABOUT THIS EPISODE

Small business owners work harder than anyone — averaging upwards of 60 hours a week.

When they need a loan, they don’t want to take time out of their day for a “delightful” customer experience…

They want convenience. They just want it to work.

It’s something Derek Corcoran, Chief Strategy Officer (CSO) at Numerated, says most banks get wrong by not even offering digital lending. And that’s just one of the many opportunities to serve SMBs he joins today’s show to discuss that most banks are missing.

In this episode, we cover:

- The two types of customer experience

- The value of convenience and simplicity for SMBs

- The goodwill community banks fostered in the pandemic (and how to avoid squandering it)

You can find this interview and many more by subscribing to Banking on Digital Growth on Apple Podcasts, on Spotify, or here.

Listening on a desktop & can’t see the links? Just search for Banking on Digital Growth in your favorite podcast player.

...if the community banks, regional banks are out there telling their business community, help me help you. You know I want to help you, we helped you during P. P. P. Give us more of your business. We can do more for you. We can there's just you know for me it's a golden opportunity and I'm just afraid if they don't move it'll slip through their fingers. Mm hmm, mm hmm mm. Mhm. Mhm. You're listening to banking on digital growth with James robert ley who believes there is no better time than now to educate and empower financial brands to gain a fresh perspective around future growth opportunities. That's why today's episode is part of the new starts now series brought to you by Nimbus who offers a complete set of tech tools and services all designed and engineered to empower you and your financial brand to maximize your future growth potential greetings and hello I am James robert, ley and welcome to episode 1 45 of the banking on digital growth podcast. Today's episode is part of the exponential insight series and I'm excited to welcome Derek Corcoran to the show. Derek is the chief strategy officer at enumerated a digital lending platform for business banking that dramatically reduces work for financial brands and their clients by using data. Welcome to the show Derek, it is so good to have you on today. Thanks James robert. Always a pleasure to talk to you. It always is. And before we get into this idea of optimizing digital banking and digital lending for smb s what's going well for you right now personally professionally it is always your pick to begin. I'm gonna give you guys, I'm gonna give you one of each um on the professional side, I'm four months in with the team of enumerated and I'm really excited. We, we have a mission to ensure that businesses have access to the capital...

...that they need in order to thrive and you know, when I look at my personal life, you know, in the community I have here, I've got somebody looks after my bike's good couple of sushi places my kids love to get dinner from, it was a week and I need those businesses to continue to succeed. I don't want it to be, you know, amazon and walmart and whole foods and that's it. You know, we need those small businesses to succeed and you know, I'm loving working with a team that's really focused on that. On a personal note, I'm really looking forward to thanksgiving, you know, I'm actually gonna get and I'm gonna take a week off while the kids are out of school and spend that time with them and hopefully here in beautiful colorado will get a bit of snow and get to enjoy that on the mountain. So yeah, I'm happy about a lot of things, you know, I'm right there with you both on the family front and then as well as talking about this idea of small to mid size businesses and what financial brands can do to continue to empower and elevate them. I'm right there with you like small business, mid size, that's the backbone of all of these local economies these communities and it creates diversity. It creates a you know, it gives a lot of flavor to just the life and if we lose them because they don't have access to capital, they don't have access to to future growth. I don't know man, I'm not that's that's the future. I don't want to see, I want to see something bigger. I want to see something better. I want to see something brighter which I'm grateful for the work that you and the team over enumerated are doing here and a lot of it comes down to experience right and and I know Chevelle and Ron Shevlin News, you know, good guy. He's been on the podcast a couple of times. He wrote a very interesting article in Forbes recently titled The rise and fall of customer experience in banking. And I'm going to quote him, I want to get your take on this. He said financial institutions that cling to the belief that improving the customer experience and in parentheses and this is his whatever that is is the key to winning...

...customers and differing differentiating themselves from their competitors are misreading trends in the market and so I know C. X. And customer experience has been Something we've been talking about for probably a good past 10 years in this industry. I know you have specifically I want to get your take here because there's a lot of talk about like brands like Zappos and and Ritz Carlton but what does this mean to bank, what does it mean to accredit? And how does Ron stinking play into all of this year? Yeah mutual respect for run. I love his work. I love the fact that you know he's been very honest about the banking and Fintech and you know I'm not going to eat the banks, the banks there. It's expensive and complicated to the event and he's been one of the people calling that out but on the customer experience side you know that that was my gig at the vocals the chief experience officer at that time in office. Chief experience officer. So I've really spent a lot of time thinking about this and I have to say I literally had like a light bulb moment one day when I realized there are two types of personal experience that we have as consumers. They are centered around the things we want to do and those around the things we have to do. So you know you talk about the Ritz Carlton. I remember the famous example of the giraffe where this stuffy, you know somebody left behind the stuff you're one of the hotels and they took photographs of the stuff you're getting a massage and on a sun bed with a cocktail and one of the golf carts and stuff like that and it went viral. And a lot of the organizations like banks looked at them and said, how do we emulate? And my advice to them has been, you can't and you shouldn't Because there are two types of customer experience. The things I want to do like go on holiday, go to the cinema, go to a restaurant. Those are things I want to do and I want them to be delightful experience. Then there are things I have to do like going to the dentist, paying my taxes and I hate to say it banking. So the things I have to do, I want them to be efficient. So I...

...want the experience to be really quick and painless so I can get back to the things I want to do and I've got more time for that. Um So I still think customer experience in banking is critical. I just think that you know that the idea of creating these delightful experiences and banking is completely overrated. I really think we need to be, you know focused on the jobs that people have to do and trying to make it as efficient as possible. And TurboTax is a great example. If you look at their website, their tagline is tax filing made easy. Yeah, jobs to be done. That's that's been a subject that we've talked about on previous podcast episodes because it's it's so practical, right? Like experience can be very like up in the clouds, but when you're focused on the jobs to be done, you're also focusing on what are people's biggest pain points, what's frustrating them and how can we make life even better or in this particular case even more simple going forward. And you make a good distinction between these two types of experiences, the things that I want to do versus the things that I have to do and what brian Claggett has always said is banking is a chore and you know, we both have kids and I think about my kids, you can put as many golden carrots out there as you want to. The tour is always going to be a chore. But I think the more that we can simplify, we're all going to win going forward. I want to dive deeper into this this focus around C. X. Specifically when it comes to business banking. When it comes to business lending, what should financial brands be thinking about to simplify A business owner's life over the next really, I would say 3-5 years if I was to give a horizon line here. Yeah, When I think about my experience working with banks on the personal banking or her retail side of the house, you know, they've had a huge focus on fast-account opening. It was it was what I was selling on the outside of...

...boca and things like instant decision on loans and the fact that the bank is available 24/7. But when you're a small business owner trying to bank for your small business, it's not a happy environment to be in and small business owners are the busiest people in the world. You know I read a survey that said 33% of them say they work in excess of 50 hours and 25% work more than 60 hours a week. Uh You know put that in context, I can relate. Sure exactly. You know we've both been in that situation where we've been proud of small businesses and and seeing the the time that it takes to run that business effectively And I kind of you know I can't settle on a curve here. I don't know if they want they need or they deserve digital convenience. But for most of what a small business needs to do from a banking perspective it requires visiting a branch and guess what the branches open the same hours that they're working, they're 60 hours to kind of run their business. So it means I actually have to stop what they're doing then go into the branch in order to get access to things like the capital and the accounts that they need in order to manage your business. And that to me it just doesn't make sense. It's like so I need banking in order to run my business because that's what I want to do. But in order to get the banking I need to stop running my business and come in and visit you and give you 90 minutes of my life so that I can get this done. So I think just recognizing that is the first thing that the banks need to do to understand that you are an enabler of these small businesses in our community, but you're, you're not convenient. Yeah. So you make a great point enabling empowering, elevating small business. And you mentioned before the retail side of the house has been focused on this. Why do you feel up to this point? There's been a bit of a lag on the S and B front when it comes to simplifying life for the end...

...user in this particular case, a small business owner. I think there are a couple of reasons that have been contributing to it. First of all, business, banking is more complex. So I'm not just dealing with an individual on dealing with an entity. The entity is made up of individuals. Sometimes the entity is owned by other entities. So in order to meet my KY CN AML requirements, I need to kind of traverse new york chart of ownership, you know, to make sure that I'm not banking a business that could be a front for some criminal activity or something like that. So it is more complex for the, for the banks and to an extent, the technology to do things like identity verification and credit checks and so on on businesses has not been as effective as it has been on the consumer world, but that has caught up so that, that those investments have been made, platforms like ours leveraged those connections into lexisnexis, small business, financial exchange, the SPS S, there's all these services available that we can bring together to actually help the bank know the business that they're about to bank better. And the second has been around relationships where the bank has felt that it's really, and I'm using bank is a proxy for bank and credit union here. So apologies to my friends in the audience sector. We, we know that credit unions are making a lot of investments into, uh, into the business banking sector at the moment as well. But they've been really focused on these relationships and which I completely understand and I agree with. But there's also a big difference between a small business saying, Hey, I need a $15,000 bridging locker today because my largest customer was like paying me and I'm going to run into trouble just me needing payroll. That's a different type of product in a different type of transaction to hey, I need $250,000 to buy my partner out of the business because I don't want to be involved anymore. So that's maybe something that I do actually want to...

...sit down and have a conversation with a banker about. It's like, you know, is this the right thing for me to do? What kind of rights in terms of can I get on the loan versus I need $15,000 cash now, you know, really quickly and we've kind of had, you know, when, when everything, when all you've got is a hammer, everything looks like a nail. And that's typically being the approach that the banks have taken is that they've got one path that they're going to put all of those conversations, all those transactions through and it's sitting down with a relationship on a branch and that has opened the opportunity for the fin techs like on deck and cabbage and so on to say, hey, we can steal a significant and profitable chunk of this market. That's a great point you make about on deck and cabbage and I mean even seeing american Express and the acquisition there, I'm getting offers now via MX through cabbage to get access to capital and not have to talk to anyone. It's a, it's a really interesting play because they're now utilizing some data and they're seeing transaction history and payback history and they're like, uh let's go ahead and give him something because we know that he's been responsible and he'll take care of it and and I'm like, yeah, great, I mean that's a growth opportunity right there, but I don't see that say at the relationships that I have at the community institution, There's not that proactive outreach, what can the community institution due to bring their level up to not just be reactive, wait for me to walk into a branch, raise my in my hand, say I have a need, they can now come to me and here's some offers that we have based upon what you've been doing, how can we help you get to the next level? Where might there be some opportunities? So before we talk about the bank opportunities, I just want to go back to defend tax for a second. One of the things that encourage all of the community bank credit union listeners to your, to your show to do is every time they go to a merchant then they go to present their card and they see an american express...

...point of sale device, recognize you channel your inner Andy Grove, you're only the paranoid survive because american express are going to be pushing the cabbage product offerings to that small business merchant where you're presenting your device because they cabbage now have that massive customer base american express has access to and they're going to be channeling you. The other thing on the on the defense tech side, the one that if I was, you know a bank owner that would be most concerned about is square. Absolutely from I did some research recently, I looked at and we'll talk about this maybe in a moment, but just to give you a quick snippet um I looked at the website for, you know on deck and cabbage and Chase business banking and both on deck and cabbage are seeing more monthly visitors than chase business bank. So the largest bank in the country has half the website traffic that someone like cabbage has Uh sorry Square chase has one of the monthly website visitors. That square has for me. That's terrifying. Like I'm talking 300,000 unique visitors every month going to business banking at chase, 30 million people going to the square website and square are now a bank. They have all the products that you know, you could need and if you want to apply for a loan with Square, you have to use them for either point of sale or payment processing and by the way, there is no loan application. So they're using all the data they have about you. So James robert, if you went to them and said, Hey Square are used for payment processing I need alone. They will immediately come back and say you're pre approved for $140,000. U 140 41 20. You can slide, you can move the slider, it's literally a slider to say 25 will probably cover it or maybe I need 55. So they've made it that easy...

...and they're using the transactional data that they're seeing as you were indicating before to already know that you're going to be a good customer. You're a good bet you're a good risk. So the opportunity for those guys is huge now. On the flip side of that right now, the community and the regional banks are in a really unique situation. 45% of the p. p. p. funds that were distributed during the pandemic Were distributed by banks with less than 10 billion in assets under management Who make up 15% of our assets under management. So 45% of the dollar value was delivered by the banks that make up 15% of our, so you could argue that they punched three x. Above their weight. They stepped up and they helped the small business communities around them. We worked with a lot of them, we worked with 140 of them were responsible for 8%. So we saw a significant volume but more importantly Within that 40 billion that we processed we saw 140 banks work late nights, work weekends, do whatever they need mobilize 70 80% of their entire bank to try and make sure that they could get the P. P. P. Funds in the hands of the small businesses. And as a result they one massive mindshare with those that small business community. I have personal friends who have moved their banking from the Big four to a smaller community bank because those community banks stepped up during P. P. P. And help them so they've moved they're checking their savings, everything to the community bank. Now is the opportunity for those community banks to capitalize on those relationships they've built double down and grow their product portfolio. Today's episode of banking on Digital growth is brought to you by Nimbus who believes in creating even better financial services for all better access, better experiences, better value, all while supporting the entire customer journey. And how do they do this, offering end to end niche banking...

...solutions that you can buy or build, providing accountability beyond the technology and prioritizing impactful, intentional innovation. Instead of chasing features ready to transform what is and create what's next, learn more at Nimbus dot com. Yeah, 100% correct. Like this. This right here is really the success story, I would say probably of the decade when it comes to the S and because this was a a paradigm shift before, you know, community institutions may or may not have been there, you had the Fintech coming in, but it was the community institutions that stepped up to support the local community and if we can capture that momentum, if we can ride that way forward to me Now is the time. So what's the opportunity there, as you look ahead out at the landscape over the next 3-5 years, what are you most hopeful and excited about for community institutions to be able to do next, when it comes to optimizing the Smb lending experience. Advertisers, make yourself back to where we started this conversation, make yourselves more convenient and Egypt to get in touch with, make it easy for those small business owners when they're updating their finances at eight o'clock in the evening after they put the kids to bed and have dinner with their family and they're sitting down in front of quickbooks, make it easy for them to say, hey, I need some help, I need some, you know, alone or hey, I've just had an influx of cash, I want to put that into a cd so that it's working for me, you know, make that available to them online. And just to give a little bit of context on the opportunity here we did some mystery shopping at the 10 largest retail banks in the country, so chaste and B of a capital on and so on. Let's get into that because I mean, we do a tremendous...

...amount of digital secret shopping for financial brands and benchmark them against Fin techs to help provide some clarity and awareness. Because if you're listening and you have not secret shopped your your own call it website against a Fintech or against the larger f. I your there's there's probably some knowledge gaps there. But if you want to take them to the next level, then get some third party objectivity, whether it's consumers or, you know, someone like Derek who can provide you with that perspective because I've Derek, I've heard this so many times, especially in the smb space James robert, we just didn't know what we didn't know. And so let's let's dive into this because this is a personal passenger subject of mine of of looking at what others are doing to benchmark against so that we can figure out what we can do even better, what do you find here? And it's funny you bring that up because very often we have people with very strong opinions but they don't have any data to back up those opinions and it's not hard to get that data as you said, go on mystery shop, the ones that you think are your competitors. So what we found when we looked at the top 10, you know, retail banks specifically looking at their business banking Was on average, they have about 19 products that they're positioning. So across checking accounts, savings accounts, credit cards, term loans, lines of credit, government lending, sp a landing and so on average of about 1919. Just on just the small business side, we're not business got it. Just a small business side, Compare that to defend text is probably three products that they're actually doubting. It's been making a simplification and and and I wrote about this in banking on digital growth. I mean that is the that is the ultimate paradox of choice. Like it's going to chick fil a and getting to choose from six maybe nine different options versus going to the cheesecake factory and you get the bible of food. I don't even know where to begin with that one. It's just too, too much, it's too overwhelming. Even Mcdonalds,...

...they've moved to the digital menus now because they have to scroll through the office, there's too many represented. Um and when we looked at the 19 products, if you split them into two groups, if you split them into accounts and loans and in accounts on talking, checking, savings cd money market and credit cards And there's a bit of a dispute as to whether a credit card is a loner or an account of classified as an account, 59% of them have an apply online option In the accounts. 15 of lending products, wow can apply online option. So there's a, there's a big mess there from the big banks. Now when I look back, I've done this research in previous roles. Let me pause. You want, I want to roll this back and I want to, I want to sort of frame it just a little bit differently, 85% do not have and apply and apply online. So like you said, that's when you, that's a huge opportunity. It's a big mess right there. Absolutely Term loans. Lines of credit government lending, all that stuff, 85% do not have those products do not have any kind of apply online option. And again, when you think about it, you know, those situations where I just need some quick cash. You know that this is something that you know would help my business survive. It's really critical that that stuff is available conveniently. This is not like I'm not talking about the $5 million dollar commercial real estate loans because I want to buy a factory or something like that. This can be you know quite tactical but really strategic and critical for the business and help the bank actually build a relationship. So yeah there's definitely an opportunity there and this is where we're seeing the defense text kind of capitalist. You know they're offering 5-$250,000 loans were practically zero effort as I said square there's no application form, I think it's cabbage or no it's actually on deck I think where you can connect your Quickbooks account and they'll...

...just suck in all the data from quickbooks to enable a an immediate decision. Now the thing about the big banks and I know this personally having worked for some of them are with many of them is they don't move quickly. They're like the titanic that these big lumbering giants when they point themselves in the right direction. Watch out but they don't move quickly. So that is the opportunity I believe for the community banks and the regional banks is we can see where the data is pointing us, it's pointing us towards digitization of SMB but if they're not there yet the smaller banks can leapfrog them build great relationships during P. P. P. Invest, get yourself in a position where you're actually ahead Of the Big 10. Yeah as you're talking through that, I'm going to give some context as well as some of the things that we've seen when looking at at secret shopping on the S. And B. Front. Thought leadership goes a long way. So you take the online application and then you couple that with for example how to grow your business in Louisiana. I mean that is a client of ours that we've coached them through this process and they are now generating MQ ALs marketing qualified leads From small business owners who are downloading this guide and it's about 50, 60 pages. It's a pretty meaty piece of content that I'm even saying, okay well what are the other opportunities here to continue to build around this idea of Thought leadership. Macharia Savings Bank had yuri on the podcast at the very beginning. Talking about building this idea of an Smb community and they were just facilitating all of these different relationships paul Long He's a commercial lender to doing the same thing. He hosts his own conference by himself as a commercial lender to bring...

...together between 80 to 120 different businesses every single year. And so it's this idea of thought leadership positioning expertise which we don't typically see that at the big four, we are seeing more of that from say like a cabbage or an on deck with their content positioning coupled with the fact of getting quick access to capital in making that super simple, super easy. So it's the experience kind of bring this conversation full circle coupled with expertise. Yeah, yeah, I kind of I get the vision of tom cruise jerry Maguire that help me help you, you know, if the if the community banks, regional banks are out there telling their business community, help me help you, you know, I want to help you, we helped you during P. P. P. Give us more of your business, we can do more for you, we can, there's just you know, for me it's a golden opportunity and I'm just afraid if they don't move it'll slip through their fingers. Yes, yes and and and you know looking ahead so that we don't lose any opportunity, all change all our progress begins with a small, simple step forward for the dear listener to make this very practical here as we wrap up today, Derek what's the one recommendation that you would say, hey, this is the best place to start is the best place to begin to optimize this digital lending experience so that we can help to continue to empower and elevate these local businesses who need access to capital. I think if we can shift the thinking within the bank, I think that's honestly where it starts. I think I believe I should say that a lot of what we do from a business lending perspective started with the loan officer. You know, we thought about it from the, from the back office perspective and then we worked our way out and eventually we hit the borrower...

...went, oh yeah, we need to get this information from the borrower, but they'll do whatever we asked them to because they want the money as like they have too many options now, they've got too many choices. Like you, I've got young kids, I've got a family and one of the spin offs from harry potter, the some creatures and where to find them. That movie, like there's there's a guy in the in the movie who wants to stand up his own bakery, his own cake shop and he goes and visits the bank manager and this event like early 19 hundreds, you know, hypothetically and it's just this horrible experience if he's sitting there, he's nervous, he's got his briefcase with his samples and he goes in and he's trying to pitch that a branch manager, branch managers asking, but where's the collateral? You know, how do I protect the bank? And so that's the old school way of doing business where you put on the suit and tie and went to go and visit the bank. The world has shifted and we need to make sure we're shifting our thinking in line with that and we need to back to the customer experience conversation, make sure that we're focused on convenience for the borrower and the S and B. When you do that, they realize that you care about them and that you're actually focused on them. So I think if we can shift our thinking from the credit operations focus to a customer borough experience focus and even a banker experience focus in the branch and how that feeds into the landing process, I think that will then open up the thinking to say, okay, how do we make this more convenient? But if we if we don't reframe the conversation then we're just gonna be throwing technology at something that's not ready for change. That's a great point in your analogy to that story about the bakery, it recalled a memory the world's greatest showman with with Hugh Jackman similar narrative where he goes in and he's very nervous, you know about this and I think this idea of transforming the thinking and almost we can use story and narrative as as a training mechanism and as a tool and we do this, this is something that I wrote about banking digital growth called story selling and to see a banker's...

...mindset shift when they think that no longer there they're the hero, they're not the hero and I think a lot of bankers feel that they're the hero and the stories that they play out in their own mind when in reality, no, it's that s and B. Is the small business owner there, the hero in the story and then the banker or the credit union leader, they're the helpful guide and they're the one who's guiding that S and B. Owner to continue to move onwards upwards, grow their business, take care of their family and ultimately just get to a bigger, better and brighter future. I got to tell you my little Hugh Jackman stories. So, um, some of your listeners will, will know me and I, I lived in Australia for 18 years and my, my wonderful, beautiful wife is Australian and I'm one of our visits back to Australia. We're flying back to the US and we were in Sydney Airport and I pointed across the counter and said, look and she looked up and Hugh Jackman was checking in at the Qantas desk and my wife turned to me and said he's even better looking in real life. Oh man, that's a great story, That's a great story. Well, listen, this has been a fantastic conversation, Derek! If someone wants to continue the conversation that we started here today, what is the best way for them to reach out and say, hello linkedin is um is probably the place where I'm most active from a social media perspective. Um and they can also find me on the enumerated website, it's N U M E R A T E D dot com. So think numerator and denominator from your your fractions when you're when you're at school, that's us and yeah, I would love the opportunity to have a conversation if anything is just to connect, you know you've you've got such great thinking, Derek, I've known you for a colleague probably 10 years now more or less and have learned so much from you over the years, so connect with Derek learned from Derek. Um and I think working together through collaboration, we can continue to...

...empower these small businesses, elevate these small businesses to get the capital the access to capital that they need through a simplified manner at a time. That's easy for them through a positive experience. Derek thank you so much for joining me on another episode of banking on digital growth buddy James robert. Always a pleasure, thank you as always. And until next time be well. Do good and make you better. Thank you for listening to another episode of banking on digital growth with James robert, ley brought to you by Nimbus who is on a mission to bring the people process and technology together to create new routes to growth for financial brands and enable them to deliver outcomes, to learn more about how you can collaborate with Nimbus to maximize your future digital growth potential visit www dot nimbus dot com until next time be well and do good. Yeah.

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