Over the course of the past year, community banks and credit unions took the spotlight for dedicating countless hours to ensure the survival of communities across the nation. You seamlessly adjusted operations to best serve your communities in safe and healthy ways. You maintained and excelled at constant communication with your account holders. The Onovative team applauds you and your teams for all the tremendous efforts over the past 14 months. Through news outlets and personal stories, the world got a preview of what we have known for years serving this industry—community financial institutions are the backbone for many towns and neighborhoods across the United States.
Small Business Impact
In a time of great need, many small businesses recognized the value in the commitment and service from community financial institutions. Your teams leaped to secure funding for small businesses from the Personal Paycheck Protection (PPP) loan program. According to the Federal Reserve, 91% of small businesses applied for some type of emergency funding, and almost half of those requests were handled by small banks. An overwhelming 40% of loan dollars and 32% of loans approved for PPP round 2 so far were generated from community banks and credit unions.
Not only did you deliver, but you also provided a superior customer experience to both your new and existing relationships. A recent Federal Reserve report cites that 79% of independent businesses that used community banks to process their PPP loan report they were satisfied with their overall experience, compared with 67% for large banks and just 49% for online lenders. The Federal Reserve also reported that 95% of borrowers who went to a large bank for their PPP loan were existing customers of the institution, while nearly 20% of small banks’ PPP borrowers were net new to their institutions.
The high level of customer service provided by community banks and credit unions during the pandemic led to referrals for PPP loans and new account openings. Through all the uncertainty of COVID-19, PPP loans allowed community banks and credit unions to prove to both new and existing small business customers that you can be relied on.
Small Business Growth
As PPP loan round 2 availability dwindles, or in many cases is exhausted, what’s next? Small business growth is trending optimistically with 41% of small business owners expecting to grow their revenue in 2021 and 37% considering expanding products and services. Community banks and credit unions have a timely opportunity to build strong, long-lasting relationships with small businesses in the communities you serve. The time is now to position yourself as their financial institution for all their business needs beyond PPP.
Engage Business Account Holders
Community banks and credit unions have a unique opportunity to increase your engagement with your PPP loan account holders to further expand your relationships. Here are six key strategies to boost your communication touchpoints:
Onboarding – Communicate with account holders within 3 days of opening a new account. According to J.D. Power research, doing so has a significant impact on satisfaction. Onboarding your business relationships is just as important as any new consumer relationships. Any new business relationships gained through your PPP loan efforts should receive the full welcome experience into your bank or credit union. A simple phone call, email or letter can leave a lasting impression.
Personalization – Leverage the information attained through the PPP loan process. Make offers specific to those that were existing account holders versus those that are brand new account holders. Use language specifically tailored to businesses with a professional tone rather than re-using general account holder language.
Nurture the Relationship – Schedule phone calls for relationship bankers to follow up and personally connect with your PPP loan account holders.
Multi-Channel Integration – Utilize email, postcards, letters, surveys, and phone calls to stay engaged and top of mind with your small business account holders. Don’t be afraid to “over-communicate” - small businesses owners have limited time but want to stay in the know and appreciate the information. Ensure your messages are received by communicating several times using multiple mediums.
Business Financial Needs Assessment – Take into account the specific needs of the business you are engaging: Did they receive all the funds requested? More loan funds might be needed. Consider surveying your PPP relationships for what’s needed next.
Expand the Relationship – Incentivize your business accounts to expand the products and services they have with your bank or credit union. Cross-selling to your current business relationships is shown to produce positive ROI. With our Core iQ software, we have seen customers implement our automated cross-sell framework that has proven effective in expanding relationships. As you begin to cross-sell to your new PPP loan relationships, promoting business checking accounts with a 90-day tracking window is recommended to allow business accounts time to convert.
To help you get started, we’ve provided a letter template for you to use to engage your PPP relationships with a cross-sell offer for a business checking account. Download the template here.