Resurgence for Small Business Bankers
Analyst's Journal - April 12th, 2012
By Linda O'Connell
Last year at this time, Barlow Research reported that the branch staff was the glue holding together the small business banking relationship. During 2010, a greater percentage of small businesses with sales of $100,000 to <$10 million that selected the branch manager as their primary contact was very satisfied with their bank compared to those selecting an account officer.
At that time, branch managers were more accessible, followed up on requests and understood the company's objectives compared to account officers.
To be released in May, Barlow's 2012 Small Business Banking Annual Report again analyzed customer evaluations of the branch manager and the account officer. What a difference a year has made.
Who are These People?
To first understand which small businesses selected a branch manager or an account officer as their primary contact, we reviewed the customer responses from Barlow's three sales segments: Micro Businesses (sales $100,000 - <$500,000), Small Enterprises ($500,000 - <$2.5MM) and Business Banking ($2.5MM - <$10MM).
Twenty-four percent of Micro Businesses selected a branch manager and 20% selected an account officer as their primary contact. More Small Enterprises favored branch managers (29%), followed by account officers (22%). It was not surprising that Business Banking companies selected account officers (31%) more often than branch managers (22%) due to the greater proportion of borrowers in this segment.
However, when evaluating the major contact based on the size of the primary bank, large bank (assets >$50B) and medium bank ($1B - <$50B) customers had similar branch manager selections (28% and 29%, respectively) and identical account officer percentages (21%). Small bank (<$1B) customers considered a senior officer, usually the bank president or the head of business banking, more important (35%) than account officers (20%) or branch managers (19%).
The Fall of the Branch Manager
Last year must have been tough on branch managers. During 2011, companies that considered an account officer their primary contact were more likely to be very satisfied with their primary bank (60%) than those that selected a branch manager (54%). A ten-point drop in bank delight by those selecting a branch manager as their primary contact caused the reversal from the prior year's results.
It might not have been totally the branch manager's fault. As the bar graph shows below, the greatest change in the branch manager's performance was a drop at being proactive in suggesting solutions. In the meantime, the account officer's performance improved for being accessible, promptly following-up and understanding the company's objectives.
The line graph above illustrates the trends in performance ratings given to account officers and branch managers for the attribute "understanding the company's objectives." While branch manager scores have been fairly consistent since 2007, the account officer's performance improved in 2011 after two declining years.
Resurgence for Small Business Bankers
Yes, the past year has been tough on branch managers. They were given additional responsibilities for small business clients assigned to the branch and increased their calling and prospecting goals. They faced small business customers unhappy with the end of free checking, an increase in banking fees, and the perception that banks do not lend to small businesses.
Meanwhile, banks were putting more feet on the street with the hiring and training of additional small business bankers. The pressure was on to find qualified small business loans from customers and prospects.
Who said that nothing changes in small business banking? Barlow Research always keeps current on the complete banking analysis and changing trends in the Micro Businesses, Small Enterprise and Business Banking segments across the country.
For more information, contact Sandy Hanson at 763-253-1800.