Blueprint of a Model Small Business Bank
A confluence of powerful forces are changing the competitive dynamics of small business banking. An attractive market coupled with underserved small businesses and the ability to remedy the situation through technological advances is driving heightened competition.
How can a bank excel in face of these forces? In my recent report, I blueprint a model small business bank and profile best practice pacesetters. I focus on customer engagement and distil best practices into three categories: excelling in overall engagement model, delivering efficient financial workflows, and embedding intelligence. While numerous banks are working on improving their engagement model, a minority are extending their value proposition to supporting financial workflows. Nonbanks and fintechs have been setting the bar here. Banks nevertheless have a ripe opportunity for differentiation, in particular through partnerships with fintechs. Embedding intelligence remains a greenfield and with the advent of GenAI will drive game-changing competitive advantage.
Figure 1: The Blueprint
In addition to elaborating on best practices, I outline a path to monetization, recognizing that while responding to the voice of the small business customer is best practice, a bank must ultimately make the economics work. Delivering workflow efficiency and embedding intelligence need to generate revenues.
Figure 2: Path to Monetization
The best practice players I profile are: for overall:?American Express, LiveOak Bank, and Starling Bank.?For delivering efficient workflows:?TD Bank, United Community Banks (the latter two have partnered with Autobooks), Pocketbook, and Square.?For embedding intelligence:?Eastern Bank (partnered with Monit) and Xero.
Educator and Advisor | Fintech, Housing Innovation, Climate Risk
6 个月Thanks for sharing Alenka. What is the floor to your definition of "small" since the institutions you mentioned are still quite sizable, possessing the scale and slack to build out new capabilities that challenge many of the small depositories I've worked in the past?