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Getting Small Business Banking Right


While employment, manufacturing and retail indicators appear to point to an economic recovery, there remains a disturbing trend amongst America’s small business owners. As the National Federation of Independent Business (NFIB) recently stated in a report: “Even as demand for credit begins to rise and as companies again start to expand … the environment for small business (is) likely becoming worse before it becomes better.”

To ascertain how small business banking is proceeding at ground level, we interviewed Sam Guerrieri, senior vice president at M&T Bank in Buffalo, N.Y., who agrees that small business credit volume seems to have retrenched a bit in the first months of this year. But Guerrieri also believes that small business banking remains a growth area for banks and outlines the steps M&T is taking to seize that opportunity.

“When we get it right, we end up serving the business owner and the business, the employees of the business and the personal side of the business owner,” he says. “If that isn’t a growth area for banks, I’m not sure what is.”

Q: There appears to be conflicting data regarding the interest small businesses have in taking out new loans or even approaching lenders. A NFIB report was less-than-optimistic while some banking professionals were encouraged by fourth-quarter numbers. What’s your perspective on this conflict?

Guerrieri: We want to lend. However, demand from small business customers has still not fully recovered. The micro small businesses (sales under $1 million) appear to be more cautious than those that fall into the Business Banking arena (sales between $1 million and $10 million) in that they have very little room for error in their financial planning/performance.

The fourth quarter of 2010 saw a large uptick in overall volume, but that has diminished in early 2011. We have increased the dollar size of applications processed by branches without Business Banking Relationship Manager involvement from $100 million to $250 million this year to enable us to respond more quickly to customer requests.

Q: Based on your experience at M&T, what types of services are small business customers looking for right now?

Guerrieri:  We continue to increase our calling activity to customers and prospects to ensure they know we are here to help them achieve their short- and long-term goals. Our customer and prospect calls are focused on understanding the cash flow cycle of the business. This has helped us understand what is important to their business operations, which identifies the need for the demand deposit account, merchant services and remote check deposit.

By taking the time to understand the needs of our customers, we identify the right accounts and solutions for their businesses. When the customer is in the right account, we have a much better chance of retaining them for the long term. These conversations have opened doors to the personal side of the relationship as well.

Q: What strategies does M&T employ for acquiring and retaining small business customers?

Guerrieri: We like to think the strength of the partnership between our Retail and Business Banking teams is what differentiates us from the competition. This approach keeps us connected so the customer benefits by having us working together to provide solutions that will help their businesses grow and succeed.

Our branch managers are making joint calls with our business bankers to demonstrate how we can bring the entire bank to our customers. In addition, we have identified 400 business specialists in our branches to help service small business customers when the branch manager is out on calls. These specialists can handle many customer inquiries, which can reduce time associated with resolving a problem. We believe the customer experience has a significant impact on acquiring and retaining accounts.

Q: Would you agree that small businesses represent an important growth area for banks?

Guerrieri: It certainly does for M&T Bank. We focus on being a community bank in all of our regions and the small business owner is a very important part of every community. The target segment is rich with complexity that requires the right expertise and products/services to meet their needs.

We want to be known as a bank that provides the best service to the business community, and in order to deliver on that you must have the best and brightest calling officers in the industry. That is why we invest in our people to give them the knowledge and time to make these calls. Our branch managers spend 50% of their time on business banking. In order to do that, they must have the support of their business partners and business specialists.

And we don’t stop with the traditional business products like loans and deposits. We have wealth advisors as part of the M&T Investment Group who are skilled at handling the investment and insurance needs for business customers. When we get it right, we end up serving the business owner and the business, the employees of the business, and the personal side of the business owner. If that isn’t a growth area for banks, I’m not sure what is.

Q: Finally, what are you seeing at M&T in the way of small business customers gravitating towards mobile services, including payments?

Guerrieri: Technology, including the evolution of mobile services, will continue to provide the business owner with speed, efficiencies, and accuracy. As long as the services are reliable and cost-effective, those customers will continue to gravitate to these services.

Our remote check deposit service has become increasingly popular with business owners since it was launched several years ago. Advances in mobile technology are also providing new and more convenient ways for business owners to manage their finances and improve cash flow. Banks will need to offer them to be competitive.

Mr. English is a freelance writer based in Chicago.