Paul Johnston, a consultant with the UK MSS practice, writes about on how the UK small business community can be better served by retail banks
A Capgemini report has highlighted the importance of focussing on relationship management in small business banking. How do banks tailor a superior customer experience for their business customers?
Small businesses are seen as high risk by many banks. In a time when banks are being encouraged to lend more but also to be less risky, how can they ensure that they are lending to the most reliable small businesses, and that once they have lent to them they mitigate the risk of the company failing?

With the banking industry continuing to recover, learning the lessons from the past is imperative. Improved dialogue with customers and a revised approach to managing the relationship with small businesses will provide greater understanding and confidence on both sides and enhance risk management. A focus on providing a superior experience to business customers will not only encourage new customers, but will increase the opportunity to increase up-selling of additional products and services by banks, as well as providing greater insight into the challenges faced by small Businesses through closer collaboration. Small businesses face many challenges in life and an improved experience with their banks will help at challenging times.
A recent report from Capgemini illustrates the benefits of focussing on both improving the relationship with small businesses and on risk management. Providing a good experience leads to a closer and more loyal relationship between the bank and their small business customers. But banks must be prepared to adapt to improve this focus on the customer relationship. Relationship managers should stay in the role for years longer than they do, as small businesses need consistency beyond only a couple of years. A close and positive relationship between a relationship manager and a small business enables a bank to understand a customer’s needs in much greater detail and thus improve additional product sales opportunities for the bank. Customers will see an improvement in the experience, increasing the likelihood of additional products and services being purchased, and improving risk management by enabling greater sharing of information.
How can banks focus on improving the customer experience? An analysis of the structure of Relationship Management teams and the behaviours and skills of relationship managers is a clear opportunity to start with. However, an effective customer experience can only be based on greater understanding both of customer groups and individual customer requirements. Using customer information effectively and across teams within the bank is critical and greater customer insight will enable banks to tailor products and services to what the individual small business customer wants or needs.
Providing a superior customer experience is an important part of encouraging loyalty. When it comes to small businesses, however, surely loyalty is less of a concern? A business is not going to change bank every month after all. What is clear is that any bank that clearly focuses on providing an excellent customer experience will not only attract more customers, but will retain them in the long term, and this is when the big profits from these customers can be realised. They should use segmentation and other customer insight to tailor a specific experience for different groups and ensure that every interaction that a business customer has with a bank makes them feel valued.
This is being talked of as a new era for banking. Let’s hope banks use the opportunity to make it a new era for their business customers too.