Findings From the C-Suite

The C-Suite bankers SOLO surveyed reveal the sentiments guiding community bank strategy today, including the concerns, potential, and readiness factor of banks for digital lending solutions.

Their responses depicted a keen awareness of the need for innovation, rooted in a practical reality of facing the challenges to do so, primarily in:

| Efficiency. | Experience. | Expense. (or, Profitability).

SOLO Reports:

• 66% of Credit Leaders believe they can adapt to the needs of their customers with new products.

• 100% of banks surveyed are unable to approve customers for SMB solutions within 24 hours.

• 100% of banks surveyed believed they are unable to leverage their customers’ 1st-party financial data to identify expansion opportunities.

Potential: 66% of bankers believe they have the ability to adapt to the financial needs of SMB’s with varying business models.

66% of respondents believe in their institution’s ability to adapt to the financial needs of SMB’s with varying business models, which manifested in 1 main way:

The bank possesses a cultural and process-driven commitment to keeping an open mind and thoughtfully evaluating revenue potential for new segments.

“We have to evolve. And there's certainly an acknowledgment at the board level and a senior leadership level about the need to continue to invest in creative ways to serve the customer; especially through digital channels.”

One theme that respondents shared when it comes to adapting to varying business models is that it heavily depends on two things:

1.) the customer’s revenue band

2.) the bank’s ability to scale that solution for other clients and segments.

Banks are likely prioritizing revenue potential over all other factors.

Of the ~30% of bankers who did reveal a struggle to adapt to the financial needs of SMB’s with varying business models, the biggest roadblock to progress was internal buy in. The problem manifested in 1 main way: the bank possesses an old school mentality that is resistant to change and instead wants to focus on existing segments they’re more familiar with.

“If we have to come up with a custom solution for somebody that usually takes a lot of time and effort and the bank avoids that as much as possible.”

One banker stated that it takes a lot of time for the bank to come back with new or custom solutions, and that this impacts their ability to grow revenue and acquire new clients.

Another, that customers often threaten to leave, which is demoralizing for the lending teams and damaging for the bank’s culture when they lack support for outside-the-box ideas.

Challenge: 100% of bankers surveyed were unable to approve customers for SMB solutions within 24 hours.

(defined as time from interest to funding/completion).

Friction developed when banks attempted to deliver products efficiently, manifesting in 2 main ways:

1. customers are ill equipped to provide accurate financial data within that time frame.

2. banks’ current tools and processes for financial data collection are manual and insufficient.

The resulting burden is shared between bank and customer.

84% of respondents felt the impact of delayed approvals, which manifested in 3 main ways:

1. Customers get incredibly frustrated with back and forth communication required which leads to them wanting to bank elsewhere.

2. The banks’ ability to deliver products in a timely manner is hindered.

3. Significant time is spent by bank employees collecting and verifying financial data which takes them away from other more important responsibilities.

Delays at the data collection stage are a primary paint point shared by leaders.

“As a business, you’re putting the customer in a very legacy and manual experience. They will go find a better bank with a digital capability to interact with.”

Another banker articulated the challenge in verifying and trusting the integrity of customer financials, even if the customer is willing to engage in a paper-based process.

“Typically small businesses are busy and not focused on their financial well-being in the way that I think the financial services industry expects them to be.”

“If people aren’t staying on top of their responsibilities for data collection, it’s taking time away that they need to be spending on other responsibilities. I become concerned about the level of time that servicing takes our team.”

Our C-Suite also shared that their banks endure a major reputational risk and an inability to stay competitive when they’re not able to turn product requests around quickly.

Of the respondents who felt this problem was impacting them in a meaningful way, 63% of bankers either had attempted a digital solution or are actively seeking one.

Opportunity: 100% of bankers feel unable to leverage their customers’ 1st-party financial data to identify expansion opportunities, identifying it as an untapped area for growth.

The problem manifested in 1 main way: the surveyed banks lack the technical ability to access 1st-party data and relying solely on self-reported financial data from customers to identify expansion opportunities.

It’s interesting to note that all bankers who reported inability to approve borrowers in 24 hours also noted the inability to leverage data for expansion, suggesting a link exists between initial data collection processes and data’s role in customer lifecycle management.

Bankers noted that while a solution has yet to come to fruition, data collection and management for increasing customer LTV is a topic of high interest, clearly reiterating the value it could create for community banks and lenders.

Several bankers noted that a strategy or attempt has been made, although with underwhelming or inconclusive results:

“We need to have a more platform based approach to data collection and the right way to do that is what we're currently trying to figure out. So currently we have email based communication with reminders.”

“We're trying to make sure our onboarding is 24 hours as opposed to three weeks. Every day we're getting closer and closer to that. We want independent verification of customers’ data, but I think we're trying to build those connections initially through the onboarding process.”

“If we’re looking at the lower end of the market, we’re a lot more reliant on bankers and sales folks to have those data conversations. At the upper end, I do think we’re more data driven to make sure we can come up with the right solution packages.”