Small Business Means BIG BUSINESS
Bernstel, Janet Bingham, ABA Bank Marketing
Banks are finding it increasingly profitable to market their services to the rapidly growing small-business sector. Online banking services as well as Internet portals are targeted increasingly to this market.
In 1993, attorney Frank Rodriguez installed a Mac Classic computer in his bedroom and launched Corporate Creations Inc., his trademark and incorporation company. A short time later, he met a representative from a local bank at a South Florida social event. As a newly minted entrepreneur, Frank was interested in the bank's treatment of small business. He liked what he heard, but decided to stay loyal to his existing bank. That is, until the mergers started.
His bank merged with another. "The service quickly deteriorated," claims Rodriguez, founder and CEO of the Miami-based company. "There was a high level of turnover." The service declined even more when his newly merged bank underwent yet another merger.
Busy growing his own company, Rodriguez had no time for indifferent bank staff and what he calls "nickel-and-dime stuff." He recalled that long-ago conversation with the other banker. The dormant seed blossomed, and Rodriguez moved his company's bank business to Fidelity Federal Bank and Trust headquartered in West Palm Beach.
"Our banking needs didn't change, they just weren't being met," says. When entrepreneurs are hands-on and pay attention to details, they get aggravated by little things like snuck-in extra fees, he notes. He experienced that with his former banks, but not with his current one.
Birth of a niche
Today, Corporate Creations International Inc. has 16 employees in four cities and is reaching what Rodriguez calls middle-market size. All across the country small businesses like Corporate Creations International Inc. are staffing to look like "big business" to banks. With self-employed Americans making up over 70 percent of businesses and more than $580 billion in sales, according to a January 2001 release by the Census Bureau, taking aim at this sector makes financial sense.
By the end of 1999, 92 percent of the respondents to the Consumer Bankers Association 2000 Small Business Banking Study said they'd increased sales staff devoted to the small-business segment in the past year or were planning to in the next 18 months. The same percentage had already rolled out more business products and services, or planned to.
Some banks had spotted the trend early and had positioned themselves as a friend of small business. FleetBoston Financial of Boston, for example, started in 1994 to target businesses with revenues of less than $10 million.
Their Small Business Solutions Centers now number 450 in the Northeast. These centers are staffed by specialists who introduce customers to an army of merchandising specific to small business. They also assist in transactions and answer general business questions. Approval by the Justice Department in January 2001 of Fleet's merger with Summit Bancorp, headquartered in Princeton, NJ., will only increase the impact.
"We will enter the small-business market place in a much more dramatic way in New Jersey," claims James Schepker, Fleet spokesperson in Hartford, Conn. "We will go from the fifth-place market share to the first-place market share with the acquisition of Summit. It will bring to that small-business customer in New Jersey a program that is very, very well developed."
Far from anticipating a loss of small-business customers due to bank staff turnover with the Summit merger, Fleet plans to tighten its focus on this core group.
"While there is often a general concern about, 'What does this mean to my banking relationship,' we bring to a marketplace a very focused and very dedicated team of specialists," claims Schepker. "When Fleet's small services group enters a market, it's really an enhancement overall."
The power of many
Another cornerstone of Fleet's marketing efforts is to emphasize its commitment to small business through strategic alliances. …