How Banks Can Leverage Local Business Relationships to Fuel Growth

The $2.3 trillion injected into the economy during the pandemic is now flowing into both the retail and commercial sectors. Community banks stand to benefit from this surge by leveraging their local presence to actively pursue relationships with the best businesses in their regions. 

Unlike large national institutions, smaller regional financial institutions (FIs) have personnel actively engaged in the local business community. These individuals can leverage trustworthy connections with new business owners to provide more effective engagement than search platforms or online reviews. Despite the rise of digital networking, in-person networks and referrals remain the most steadfast source of trust and partnership confidence.

Identifying the Best Local Businesses

How can an FI identify which local businesses to pursue?   Start by focusing on the following attributes:

• Talent. Leading organizations tend to hire the best talent and thus are the most efficiently run, so assess the quality of the people. 
• Industry. They also are typically in growth industries, which means they have substantial momentum and are better positioned than most to weather an economic downturn. 
• Community leadership. Top businesses often are involved in local organizations and have strong networks that can be leveraged to grow the FI’s business.

Examples of leading local businesses typically include health clinics, surgery centers, imaging services and other healthcare providers; home services firms such as green-energy builders; and firms that specialize in data analytics, software-as-a-servce and other digital capabilities. 

Meeting the Needs of Strong Businesses

Every FI wants high-performing community businesses, with their substantial deposit accounts, growth-related finance needs and resilient business models, as customers. However, competing for these organizations’ business requires a thorough understanding of their habits, needs and preferences.

Such firms prioritize efficiency and aren’t afraid to put in extra hours to achieve their objectives. They tend to be the fastest adopters of new technology, according to a Talent Insights report. And their teams often exhibit forward-looking mindsets and prefer to partner with organizations that can facilitate seamless, streamlined processes to optimize efficiency.

To capture the attention of these high-achieving businesses, FIs can offer solutions that effectively meet their needs and pique their interest. They should offer convenient 24/7 access to relevant services online, as well as personalized assistance that can keep pace with business leaders’ unpredictable schedules. As online lenders continue to shift support offshore, the personal touch of a local banker can be a breath of fresh air for rapidly growing business, instilling trust that financial transactions will proceed smoothly.

The differentiation doesn’t end there. The financial products or services offered must possess value propositions that set the FI apart from the competition. For example, innovative offerings like lending-as-a-service (LaaS) can empower businesses to generate new payment options for customers and improve overall cash flow. The benefits of the partnership to both the FI and its customer can create compelling value.

Advantages of Community Business Partnerships

Gaining the trust of prominent local businesses can significantly enhance an FI’s momentum in the community. Such relationships often present opportunities to cultivate broader brand recognition for the institution across diverse growth industries.

For example, talented leaders tend to explore roles at a wide range of companies throughout their careers, bringing valuable tools and relationships with them. An FI that makes a strong impression can follow those individuals when they transition to new positions and enterprises, increasing the institution’s brand visibility and connections within local business networks.

Moreover, top local business leaders stick together. When an FI offers a compelling solution with a strong value proposition, those community leaders are likely to discuss their experiences with peers. Positive word-of-mouth endorsements from community, neighborhood or family leaders can be among the most powerful ways to win new business from other local organizations. 

Growth industries also tend to pave the way for additional businesses, suppliers and new markets. FIs that have already secured strong reputations among local industry leaders often have opportunities to showcase their value to emerging organizations as the market evolves, helping to fuel and sustain the institution’s long-term success.