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What’s the Deal With Small Business Banking? January 18, 2018 10:00 AM – 11:00 AM CST
Bob Neuhaus Senior Consultant at J.D. Power Financial Services Practice
Jack Hubbard Chief Experience Officer, St. Meyer & Hubbard
Julie Kleffel Executive Vice President, Small Business Banking at Seacoast Bank
2
§ 10 Minutes With • Joe, Mark, David, Tim, Tom, Jack
§ LinkedIn Publishing • My United States of Sales Series
§ Conversations Quarterly • Best one ever
§ Public Workshop • Two open seats for April 24-25
§ Business Finance Basics • You want deposits?
What’s On Our Plate?
Some Q1 Updates
3
§ Senior Director, J.D. Power Financial Services Division § Senior Positions at Axiom, TNS, Greenwich § Results generating banker
• JP Morgan • M&T
§ Regular Conference Speaker § Solid Content
Bob Neuhaus
Experienced Financial Services Pro
©2018J.D.Power.AllRightsReserved.CONFIDENTIAL&PROPRIETARY—ForInternalUse.
2017 U.S. Small Business Banking Satisfaction StudySM
BobNeuhausSr.Director–J.D.PowerBankingPractice
January2018
5©2017J.D.Power.AllRightsReserved.CONFIDENTIAL&PROPRIETARY—ForInternalUse.
WhatIwouldliketosharewithyou
• TheWinningFormula(s)• IndustryperformanceonKPI’s– AccountManagers– Branchservicequality– Digital
• TrustandNPS
6 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
TheWinningFormula(s)2017SmallBusinessBankingAwardWinners
West Northeast
South
Midwest
7 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
IndustryperformanceonKPIsisamixedbag
89%80% 79% 76% 76% 75% 68%
Noissueswithbranchappearance
Greeteduponenteringbranch
Experiencednoproblems
Waited5minutesorlessinbranch
Branchrepthankedcustomerandofferedadditionalassistance
CSRhadinformationreadybeforejoiningcall
Accountmanagerdiscussedneedsandprovidedsolution
IndustryAvg.
59% 57% 56%47%
32% 29%
Connectedwithfinancialservicesspecialist
Usedatleast5websitefeatures
Completelyunderstandfeestructure
Branchrepgreetedcustomerbyname
Accountmanagerassignedandcompletelyunderstandsbusiness
Bankproactivelycontactedatleast2times
8 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
887
743 7529.04
7.42 7.43
FullPartnership LimitedPartnership NoPartnership
OverallSatisfaction OverallLevelofTrust
AccountManagementDonerightmakesallthedifference
|----------------------AccountManagerAssigned--------------------------------------|
9 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
ServingSmallBusinessCustomersintheBranch
79% 71%SmallBusinessBanking RetailBanking
24.8 13.6SmallBusinessBanking RetailBanking
42%25%Nowait
3.95.2Avg.waittime
60%47%Greetedbyname
8.838.58Courtesy
8.568.24Knowledge
Small Businesses
Retail
Incidence
Frequency
10 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
Non-Borrowersareunderserved–thebasics
84%
56%
79%64%
75%76%
37%
73%
48%39%
Welcomedatbranchentrance
Repgreetedcustomerbyname
Repofferedadd'lassistanceand
thanked
Completelyunderstandfee
structure
Usedatleast5featuresonwebsite
AccountManagement
Borrowers Non-borrowers
11 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
Non-Borrowersareunderserved–accountmanagement
46%
76%
47%
71%
19%
54%
19%36%
AMassigned&understandsbusiness
AMdiscussedbusinessneeds&provided
solution
Contacted2ormoretimestodiscussbusinessneeds
Connectedwithatleastonetypeofspecialist
Borrowers Non-borrowers
12 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
822757
Borrower Non-Borrower
Non-Borrowersareunderserved–trustfactors
7.98 8.19 8.22 8.35
6.85 7.26 7.42 7.68
Putscustomerfirst
Providesusefulguidance/advice
Takesresponsibiltyformistakesandresolves
effectively
Fulfillsserviceexpectations
13 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
Differentiatingondigital
751
813840
Branchcentric;limitedornodigital
Heavyonlineuserwithnomobile
Heavyonlineuserwithmobile
14 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
Digitalexcellencestartswitheducation
SmallBusinessMobileSatisfactionIndex
762
892
Understandmobileproductpartially/notatall
Understandmobileproductcompletely
15 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
BuildingTrustwithcustomersatscale
TrustModel
28%
27%
26%
20%
FulfillsServiceExpectations
TakesResponsibilityforMistakesandResolves
Effectively
PutsCustomersFirst
ProvidesUsefulGuidance/Advice
16 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.
2% 8% 10%
43%
86%
11%
29%
56%
50%
12%
87%64%
34%
7%2%
4orbelow 5 6-7 8-9 10
Promoters Passives Detractors
CreatingSmallBusinessBankingAdvocates
NetPromoter,®NetPromoterSystem,®NetPromoterScore,®NPS®andtheNPS-relatedemoticonsareregisteredtrademarksofBain&Company,Inc.,FredReichheldandSatmetrixSystems,Inc.
45
39
27
26
10
2017Full-ServiceInvestor
2017SmallBusinessBanking-AccountManagerAssigned
2018RetailBankingWave1
2017SelfDirectedInvestor
2017SmallBusinessBanking-NoAccountManagerAssigned
NetPromoterScore® TrustandNPS®
OverallTrustRating(10-pointScale)
%ofCustomers: 7% 9% 15% 44% 25%
17
§ Executive Vice President, Community Banking Executive, Seacoast Bank • $5.4billion 58 offices, Stuart, Florida
§ Amsouth, BankFIRST § Commercial Lending School and Stonier Honors Grad
• Capstone Project – “Implementing a Performance Culture” published by ABA
§ Named Orlando Business Journal’s 2017 Business Executive of the Year
Julie Kleffel
Award Winning Banker
DigitalInnovation–What’sTheDealwithSmallBusinessBanking?JulieKleffel
2018VirtualLearningLabSeries–St.Meyer&Hubbard
19
Agenda
Number of Banks Headquartered in Florida per Year
Banks Have Not Been Immune to Change N
umbe
r of F
L H
eadq
uart
ered
Ban
ks(1
)
Pre-Crisis
M&A related consolidation is more or less offset by de novo bank creation
Post-Crisis
M&A and bank failures pick up steam with no de novo bank creation
49.7% Consolidation Since 2008
316 310 307 309 300 308 313 322 308
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3 Source: SNL Financial and FDIC.gov. Note: Includes Commercial Banks, Savings Banks, and Savings & Loan Associations. Number of banks measured at year end with the exception of 2016Q3 (latest regulatory data available). A bank is included if the charter is still outstanding as of 12/31 of that year with the exception of 2016Q3.
288 248
228 212
201 183
164 155
20
21
Disrupted Industries
January 26, 2016
French taxi drivers clash with police in anti-Uber strike
December 31, 2012
Tribune Co. emerges from bankruptcy
November 6, 2013
Blockbuster Video-Rental Chain Will Shut All U.S. Stores
Bloomberg
January 17, 2017
Sears Clings to Catalog Thinking in an Online World
DealB%k
22
It took Hilton Hotels 93 years to build an inventory of over 600,000 rooms
Airbnb got there in just 4 years and now has close to 900,000 rooms
Source: TechCrunch
FIVE CUSTOMER
NEEDS
PAY FOR THINGS FINANCE THINGS GROW THEIR MONEY MANAGE THEIR MONEY PROTECT THEIR MONEY
Customer Financial Needs Have Not Changed in 1000 Years
23 Source: Ignite Corp. and Roger Goldman
FIVE CUSTOMER
NEEDS
PAY FOR THINGS FINANCE THINGS GROW THEIR MONEY MANAGE THEIR MONEY PROTECT THEIR MONEY
Its How They are Met that Have Changed Drastically
24 Source: Ignite Corp. and Roger Goldman
The Community Banking Perception Gap
“Community banks cannot serve the broad financial needs of a business or consumer”
“Community banks can only nibble around the edges of a much bigger relationship, and must take on more risk in order to grow”
25
“Community banks cannot compete in a digital world”
Digital Defined
Lower Technology Costs Have Leveled the Playing Field Digital Capabilities and Software Enable Smaller Banks to Compete in Ways Previously Unimagined
Digital Customer Servicing Capabilities Mean Lower Costs
Marketing and Analytics Software to Drive Sales Growth
Level Playing Field is Now a Reality
IMPLICATION: Customers choosing lower cost channels for service ‒ good for customer and bank
IMPLICATION: Banks can now drive additional sales
IMPLICATION: Small banks can now compete in ways previously unimagined… and drive results today
26
Confidential&ProprietaryInformation
Central to Any Bank’s Future Success Will Be their Ability to Use Data to Drive Greater Value for Customers and Shareholders
Analytics Capability is a Strategic Advantage
It Starts with Customer Lifetime Value
“Knowing each customer’s profitability is the first step to managing them”
“If you can’t sort out your customers — if you can’t look at them and know who is good and who is bad — then you can’t be customer centric”
Peter Fader Professor of Marketing
27
Power has Shifted from Supplier to Customer in Every Industry
• Proactively identify customer pain points
• Constantly audit your business model
• Organize resources around opportunities
Yesterday Today
Positioning digital innovation at the heart of our business
Source: Cap Gemini Technology Consulting 28
Customer/Industry InsightBuild knowledge. Challenge customers with insight to help them grow and prosper
Bringing Together Marketing Analysis and Business Banker Knowledge
Analytics Leverage data from multiple internal and external sources to better understand customer needs
CollaborationClose relationship between Business Banking and Marketing to refine GTM strategies
29
30
Data Management and Effective Utilization is Key
“Because we are more aware of the customer groups we create value with, we can fine-tune our customer treatment strategies as well as our customer acquisition efforts to generate very high returns.” “Our size is an advantage because our data isn’t
trapped in a bunch of different silos. We have one core banking provider, everything flows through it, and the data is readily available.”
-Jeff Lee, Chief Marketing Officer Seacoast Bank
Source: “Finding your best customers with analytics” and “Small Banks Using Big Data”
Unlike Other Community Banks, Seacoast Uses its Vast Data Set to Recognize and Meet Customer Needs
Auto
mat
ed O
ffer
s
Inbound Call
Outbound Call
In Branch
ATMs
Online Banking
Direct Mail
Mobile Banking
31
Unique Approach to Serving Our Customers (Patent Pending)
Behavioral Data
FIVE CUSTOMER
NEEDS
PAY FOR THINGS FINANCE THINGS GROW THEIR MONEY MANAGE THEIR MONEY PROTECT THEIR MONEY
Source: Ignite Corp. and Roger Goldman
500
1,000
1,500
2,000
2,500
3,000
2013 2014 2015 2016
Original Sales Rate New Sales Rate
Meeting Customer Needs Vastly Expands Sales Opportunity
32
Deepening Relationships
CONSUMER and SMALL BUSINESS
LOANS
Deepening Relationships
DEPOSIT ACCOUNTS
Deepening Relationships
DEBIT CARDS
135%
(UnitsSold)
5,000
10,000
15,000
20,000
2013 2014 2015 2016
Original Sales Rate New Sales Rate
33
Deepening Relationships
CONSUMER and SMALL BUSINESS
LOANS
Deepening Relationships
DEPOSIT ACCOUNTS
Deepening Relationships
DEBIT CARDS
43% (UnitsSold)
Meeting Customer Needs Vastly Expands Sales Opportunity
5,000
10,000
15,000
20,000
2013 2014 2015 2016
Original Sales Rate New Sales Rate
34
Deepening Relationships
CONSUMER and SMALL BUSINESS
LOANS
Deepening Relationships
DEPOSIT ACCOUNTS
Deepening Relationships
DEBIT CARDS
45% (UnitsSold)
Meeting Customer Needs Vastly Expands Sales Opportunity
“ContentisKing,butengagementisQueen…andtheladyrulesthehouse.“
–MariSmith
36
What Book Am I Reading Right Now?
What’s the Deal With Small Business Banking? Thank you for joining us!
Bob Neuhaus [email protected]
Jack Hubbard [email protected]
Julie Kleffel [email protected]