Did I Just Say 'Banking' And 'Innovation' In The Same Sentence?

Apr 22 2014, 6:52pm CDT | by

Bankers take a lot of abuse for not being the most innovative characters, but that doesn’t mean there aren’t innovative bankers. There have been a lot of predictions regarding technology implementation within banks in 2014, which I think are going to happen (or at least they should), but that isn’t the only way innovation takes place within the marbled sanctuaries where Mr. Banks, of Mary Poppins fame, spent his days counting tuppence.

Here are a few small business lending innovations I think bankers should pay attention to:

Alternative Lenders Within the Bank?

Not too long ago I spoke with a former alternative lender who is now doing small business equipment loans out of a traditional bank in California. He runs his national business loan department as a stand-alone business unit, the same way he did before he became part of a traditional bank.

Over the last few years, specialty loan products like equipment loans, among others, have been much easier for small business owners to acquire than traditional, long-term, fixed-interest loans from the bank. What’s more, as online alternative lenders continue to increase their share of the market, I hear of forward-thinking bankers looking at what online lenders are doing and incorporating them into the mix of small business loan products they offer.

Introducing the paradigm shift of treating equipment loans like an alternative lender rather than a traditional banker might be a shock to some in the bank, but a lower cost of capital along with a national footprint is a great combination for many small business owners using this service.

Banker Needs a New Pair of Shoes

Another group of bankers set time aside every week to visit current and potential customers on their turf. Of course this isn’t that unusual, the best community bankers have been doing this for years. What makes these visits different? It’s who makes them—the bank president and the rest of his executive team.

It’s far too easy for all of us to let the day-to-day stuff get in the way of what we would otherwise consider important work. These bank executives schedule a certain amount of time each month to visit small business owners they would like to see become bank customers as well as some of their current customers. They claim it’s amazing what they discover by taking the bank’s executives on the road.

Innovation doesn’t always require a new idea. Sometimes it’s as simple as revisiting old ideas with a fresh perspective and interpretation.

It’s A Lot Like Batman and Robin, or Maybe Hot Fudge and Ice Cream

I like the idea of incorporating the lessons we’ve learned online within the small business loan process. Another bank in California, has partnered with an online service provider to streamline the small business loan process. For SBA (Small Business Administration) guaranteed loans of under $150,000 or less, this banking/technology partnership has reduced the time it takes to get an SBA loan approved to as little as five days. By leveraging an online application, which is substantially less cumbersome than a traditional application, small business owners who might not otherwise be able to get a low-interest SBA loan are finding success because the partnership substantially lowers the cost of servicing these smaller loan amounts.

Aesop may have coined the phrase, “Necessity is the mother of invention,” but this partnership leverages innovation to benefit small business owners all across the country.

Yes, bankers can be innovative and there are many who are thinking outside the box to make their products and services more accessible to their customers. Mobile banking and other technology tools are a big part of that, but that’s not the only place bankers can innovate. Are you an innovative banker? Share with us what you’re doing to put old paradigms out to pasture.

 
 

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