With the ending of SBA Payment Protection Program (PPP) loans, banks’ small business loan portfolios declined significantly in the second half of 2021. However, in line with the economic recovery, the outlook for small businesses appears positive entering 2022 (pandemic permitting). With this in mind, we observed the following trends in small business marketing, thought leadership and product development during 4Q21 as both traditional and challenger banks jockeyed for position in the small business market.
Financial providers continued to market to small businesses in a variety of ways, such as:
Developing campaigns and messaging around small business events, such as Women’s Small Business Month (in October) and Small Business Saturday (in November).
Financial providers are pursuing a multi-faceted approach to small business thought leadership, including:
Coverage of a broad range of topics of interest to small business owners
Increase in content targeted at different business owner segments and industries
Multiple content formats, led by articles and blogs, but providers are also increasingly using other content types, such as newsletters, videos, infographics and podcast series. (Bank of the West launched the Means & Matters podcast focused on women business owners. Cadence Bank introduced Good Companies, its first podcast.)
Continued focus on portals to organize content. Regions extended its Next Step sub-brand with the launch of the Next Step for Business portal.
With a significant majority of small businesses embracing digital channels, banks are expanding digital functionality and using these channels for both service and sales.
KeyBank reported a 50% rise in digitally active small business clients post-pandemic.
In a November 2021 presentation, U.S. Bank reported that the digital channel’s share of small business sales rose 2.5 times over the previous year.
Huntington Bank reported that digital channels accounted for 16% of new business deposit accounts, up from 12% in 2Q21 (and 0% in 3Q20).
Traditional banks are facing competition from a diverse array of challengers that are launching new products, aggressive pricing and a focus on the digital experience.
American Express sought to take advantage of its leadership small business payments by launching Kabbage Funding and the Amex Business Checking app.
Intuit launched the Money by QuickBooks mobile app and QuickBooks Checking.
Leading issuers launched new small business cards to capture a share of the expected strong growth in small business card spending in 2022.
In 2022, we expect that most of these trends will continue as new entrants look to identify and exploit market gaps, and incumbents focus on protecting and growing their small business customer bases by refining their positioning, products, offers and customer experience.
Established and challenger banks responded to key changes in the small business landscape (ongoing economic recovery and the ending of PPP loans) in the third quarter of 2021 with new business banking solutions and thought leadership.
Banks published surveys that gauged small business owner optimism and addressed current hot topics, such as inflation (PNC), supply chain disruptions (Umpqua Bank), access to funding (Goldman Sachs) and relationship with their financial service provider (Kabbage).
Leading small business credit card issuers launched new cards with high earn rates to capture a greater share of the increased card spend following the pandemic. Noteworthy examples include Capital One Spark Cash Plus (2% cash back on all purchases) and U.S. Bank Triple Cash Rewards Visa Business (3% cash back on four core categories). In addition, American Express launched a business-to-business marketing campaign (“Built for Business”) promoting its business cards.
Financial firms continued to generate small business content, with new podcast services added to the suite of content options during the quarter (e.g., Regions Next Step for Business and Comerica’s Small Business Summer Series on LinkedIn).
Banks rolled out initiatives for historically-underserved business segments, including black-owned business (Ally’s $30 million commitment to help grow black-owned businesses) and women-owned businesses (BMO Harris’s Women in Business Credit Program).
There was a popular song at
the end of World War I, “How Ya Gonna Keep ‘Em Down on the Farm,” about how
soldiers returning to rural America might be restless after having seen the
wonders of Paris (“How ya gonna keep ’em down on the farm after they’ve seen
Paree [Paris]”). We believe financial marketers should be feeling a similar
anxiety about their customers today, who during the new reality of our social
isolation have experienced very different ways of interacting with their
There’s absolutely no
question that none of us want to continue living the way we have since
mid-March, but customers’ experiences with new ways of conducting business are changing
their expectations and needs with respect to financial services companies.
Certainly, some of these experiences have been far from positive, but the
forced disruption of the status quo has opened people’s eyes to new
possibilities and has elevated new and different attributes to important and
valuable parts of their financial services relationships. For example:
Financial advisors and brokers may
not welcome as many wholesalers into their offices after finding that virtual
conversations work just fine.
Small businesses may set a higher
bar for their banks to provide digital support and services after going through
the pain of PPP.
Middle market companies may not welcome
one-on-one conversations with prospective commercial lenders.
Consumers may place even more
importance on the availability and quality of phone and online customer support
— enough to overcome their normal bank-switching inertia.
EMI is currently conducting
research, in partnership with The Gramercy Institute, among asset management
firm marketing leaders to understand how they are providing support to
socially-distanced sales teams. This research has revealed many different
approaches (which we’ll share in future blog posts), but a common thread is
that these marketing leaders believe that many of the adaptations forced by
social isolation are likely to drive greater alignment between marketing and
sales. Whether or not rose-colored glasses are playing a part in these
assessments, this positive outlook indicates that at least some of the new
approaches will carry on even when our world begins to open up.
On the one hand, it’s a good
sign that firms may be more inclined to challenge assumptions and “standard
operating procedures” in favor of new ideas that could better serve client
needs. On the other hand, there is danger in greenlighting even
well-intentioned new ideas if they aren’t subject to any more validation of
their effectiveness than the old ways of doing things. It is therefore vitally
important that financial marketers treat our current reality as a testing
opportunity, not just an exercise in making the best of a bad situation. The
key to this testing mindset will be analyzing data for answers to questions
Has the volume of sales
opportunities gone up or down?
Have salespeople had more or fewer
direct interactions with customers and prospects?
Has the quantity of inbound
inquiries increased or decreased?
Have customers and prospects
interacted more or less with digital communications?
Many or even most of the new
virtual and digital approaches have the virtue of being cheaper than their
pre-pandemic equivalents. That is why it is so important for financial
marketers to not only “feel” that a new approach has been a success, but also
quantify the increases or decreases in sales performance and customer
satisfaction. Failing to do this runs the risk of marketers waking up in a
world of lower budgets (“you proved that you don’t need to do as many expensive
things”) and even more unobtainable objectives. In short, unless marketers can provide
an alternative narrative, senior management may easily assume that marketing
really can do more with less — and make budget allocation decisions that are
disastrous for financial marketers and their companies.