Small and medium-sized businesses (SMBs) play a crucial role in the development of communities. In the current landscape, these businesses are actively seeking support and optimism from community financial institutions. This presents a golden opportunity for banks and credit unions that prioritize the needs of SMBs. Establishing and expanding an SMB in today's world can be challenging, but how can financial institutions genuinely support them?

The top 3 insights from this article:

  • Challenges and Opportunities in the SMB Space: There's a growing preference for local financial partners who understand the unique needs of the community. Local financial institutions have an edge over larger banks as they can offer tailored solutions, especially during varying economic conditions.
  • Digital Solutions with a Human Touch: Financial institutions should aim to strike a balance between offering digital solutions and building relationships based on trust, transparency, and genuine concern for the well-being of SMB entrepreneurs.
  • Building Trust through Collaboration: By actively participating in community events and understanding the needs of SMBs, financial institutions can position themselves as true partners, offering innovative solutions tailored to the unique challenges faced by SMB entrepreneurs.

Challenges and Opportunities in the SMB Space

In a recent episode of the Banking on Digital Growth Podcast, hosted by James Robert Lay, April Clobes, the President and CEO of MSU Federal Credit Union, was invited to share her insights. The episode, part of the "Heart of Growth" series sponsored by Nymbus, uncovered how MSU FCU emphasizes the importance of SMBs in community development.

When asked about the primary concerns of SMB entrepreneurs in today's complex world, April pointed out the post-COVID demand for access to capital, working lines of credit, and support for scaling and growth. She highlighted the increasing preference of SMBs for local partners, especially in the wake of community-focused movements post-COVID.

Digital Solutions with a Human Touch

The conversation then shifted to the balance between digital advancements and maintaining personal relationships. April believes that while most people prefer self-serving digital solutions for routine tasks, there's an undeniable need for human interaction, especially when seeking reassurances or clarifications.

Related Content: Exploring Growth Opportunities in Small Business and Credit Union Collaboration 

James Robert likened the role of financial institutions to that of trusted advisors, drawing parallels with iconic mentor figures like Obi-Wan Kenobi and Gandalf. He emphasized the importance of building relationships based on trust, transparency, and a genuine focus on the well-being of SMB entrepreneurs. For financial brands, trust is a combination of words and actions.

Building Trust in the SMB Space

When discussing the SMB landscape and its connection to local communities, a recurring theme emerges: the importance of trust. This trust, often visualized as a metaphorical fund, is crucial for SMB entrepreneurs. The goal is not just to provide assistance but to instill hope for the future.

April emphasizes the challenge of instilling hope in others. However, she believes that establishing a trusted relationship and consistently delivering on promises can make a significant difference. Being present and supportive in community spaces is vital for financial institutions, as it aids in the growth and prosperity of small businesses. This, in turn, uplifts the global community, creating a cycle of trust and support.

Related Content: Running an SMB Is Hard Work - Banking Shouldn’t Be 

James Robert introduces the concept of storytelling and its various archetypes. He points out that while there are numerous ways to tell a story, SMB entrepreneurs often find themselves overwhelmed with their own "hero's journey." The challenge lies in effectively communicating with these entrepreneurs and understanding their unique journeys.

April shares that in her experience, SMB entrepreneurs seek active participation in community events, such as chamber meetings, startup competitions, and supplier programs. Being present in these spaces and actively listening to their needs is crucial. By attending community meetings and understanding the requirements of SMBs, financial institutions can position themselves as partners, offering innovative solutions.

Adapting to Rapid Change

The world is evolving at an unprecedented pace, making it challenging for SMB entrepreneurs to keep up. April highlights the importance of adaptability and communication. With the ongoing changes in work dynamics, such as the shift to hybrid workspaces and the evolution of digital platforms, it's essential to ensure that everyone is on the same page. Effective change management, which involves clear communication and feedback mechanisms, is crucial. Embracing technological advancements is not just about staying competitive but ensuring the organization's longevity.

Empowering SMB Entrepreneurs: A Collaborative Approach to Growth

How can Community Financial brands not only collaborate but also co-create with the ever-changing needs and aspirations of SMB entrepreneurs? The answer lies in real-life examples of community involvement and proactive solutions.

Related Content: How to Best Serve the SMB Market with Embedded Fintech 

April shares an inspiring story of a local flight school that identified a shortage of commercial airline pilots post-COVID. By partnering with a regional airport and a local school district, they aimed to provide an alternative career path for high school students interested in aviation. However, the financial burden of training posed a challenge. Recognizing this, community financial brands stepped in, designing a loan program tailored to these students' needs. This initiative's success was rooted in active listening and understanding the unique requirements of the community.

With the continuous transformation of the world and the rapid pace of innovation, there's a sense of optimism at the intersection of community financial brands and SMBs.

Harnessing Technology and Coaching for SMBs

April highlights the potential of new technology in serving SMBs more efficiently. With advancements in AI, financial brands can now offer predictive insights, saving entrepreneurs time and effort. The convergence of data and user experience allows for a more personalized and swift response to consumers' needs.

Beyond traditional financial services, there's a growing need for advisory roles. Community financial brands can play a pivotal role in guiding SMBs, not just in financial matters but also in operational efficiency. By fostering connections between local businesses and offering insights into best practices, these brands can significantly impact community growth.

One of the most crucial takeaways from the conversation is the importance of active listening. April recounts how they transitioned from using consumer products for SMBs to developing specialized solutions by paying attention to their unique needs. This shift underscores the significance of understanding and addressing the specific challenges faced by SMB entrepreneurs.

Take Action Today:

  • Understand and Address Unique Community Needs:
    Engage with the local community and SMBs to understand their specific financial and developmental needs, especially considering the post-COVID economic landscape.
    Offer tailored financial solutions, such as access to capital and working lines of credit, that are specifically designed to support the scaling and growth of SMBs in the community.
  • Implement Digital Solutions While Maintaining Personal Relationships: While ensuring the availability and efficiency of digital solutions for routine tasks, maintain a robust mechanism for human interaction to provide reassurances and clarifications when needed.
  • Engage and Participate in Community Events:
    Be present and supportive in community spaces, such as chamber meetings, startup competitions, and supplier programs, to understand and address the needs of SMBs.

The future of SMB entrepreneurs lies in the hands of those willing to listen, learn, and act. By putting SMBs at the heart of growth and making incremental improvements, Community Financial brands can make a lasting impact. As James Clear aptly puts it, even a 1% improvement can lead to significant compounded growth over time.

For more about financial transformation, reach out to James Robert Lay at the Digital Growth Institute.