Vertical expertise helps banks catering to businesses.

• Author: Martin, Bobby
• Position: SALES DEVELOPMENT

COMPETITION FOR BUSINESS BANKING CUSTOMERS HAS ALWAYS BEEN INTENSE-but today it's become fierce.

Business customers have always been desirable for banks because they maintain larger direct deposit account balances than consumers, pay higher rates for loans, and purchase more products. To lure businesses into their banks, senior leaders mandate increased calling activity from their officers, offer incentives for businesses to switch accounts, invest in creative marketing campaigns, and spend money building free website tools to help them succeed.

But one strategy that's gaining momentum has been deepening the bank's vertical expertise to solve industry-specific challenges and to carve out its own niche. To win new accounts, the bank learns the industry's jargon, tailors solutions, and gets loans approved faster based on its expertise. The results can be lucrative--the bank benefits from powerful word-of-mouth marketing by gaining "industry insider" status.

Bank calling officers have been specializing in industries for years--that's nothing new. They gain a few customers in a particular industry--i.e. dry cleaners, physician practices or furniture stores--then build momentum by finding similar customers. The sales process occurs naturally; they do a good job serving one dry cleaner and earn referrals to other ones--all the while learning unique financial challenges their bank can solve.

Businesses, especially small ones, greatly value industry expertise. According to Barlow Research, a bank market research organization in Minneapolis, 51 percent of small businesses said having a bank that "caters to my specific industry needs" is a "top priority" or "very important." Only 44 percent said having a bank that is "involved in my community" is a "top priority" or "very important."

Banks that are taking this approach

Today, banks are capitalizing on this dynamic more than ever. Live Oak Bank was founded in Wilmington, N.C. in 2008 to cater specifically to veterinary practices across the United States, primarily by helping them gain SBA loans. Its marketing strategies include educational seminars at veterinary schools for new students opening practices and a website specifically designed to attract vets. Live Oak has also added dentists...