Community Banks Poised for Greater Market Share in Small Business Segment
Community banks have a unique opportunity to increase their market share in the small business segment, according to Brian McEvoy, chief retail banking officer at Webster Five, a community bank based in Massachusetts. This could help such banks ensure their longevity in an industry where consolidation has given rise to larger, more intimidating competitors.
Small Business Segment: A Gold Mine for Community Banks
Addressing a gathering at the American Banker’s Small Business Banking conference, McEvoy emphasized the potential of the small business banking segment for community banks. McEvoy, who previously worked as a commercial banker at TD Bank and Synovus Financial, argued that the needs of small businesses are not being met by larger banking institutions. He stated, “I don’t see them in the market, to be honest.”
According to McEvoy, larger banks like TD and Bank of America have a holistic approach to handling their customers, whereas smaller banks are more focused on commercial real estate and trying to go upmarket. “There’s really not a lot of banks out there focused on the small business segment,” he added.
Meeting the Needs of Small Businesses
Some banks in Massachusetts and across New England might disagree with McEvoy’s view. For instance, Eastern Bank in Boston has been the leading originator of U.S. Small Business Administration 7(a) loans in Massachusetts for several years now. TD Bank, which has a significant presence in the state, is also a major SBA lender. Other large SBA lenders in the region include Bank of America, M&T Bank, and Webster Bank.
Despite these facts, McEvoy believes that community banks like Webster Five, which has $1.3 billion in assets and was founded in 1868, can still make significant inroads in the small business segment. He noted that there are 75,000 small businesses in Central Massachusetts alone, accounting for roughly 75% of all businesses in the region.
Strategy for Success
Webster Five’s strategy to serve more small businesses revolves around relationship-based customer service, personalization, technology capabilities, and training bankers to understand the economics of banking in addition to driving sales. McEvoy also views partnerships with fintech firms as crucial to providing the technology needed to serve small businesses. He further stressed the importance of maintaining strong ties with chambers of commerce and other small-business support organizations.
“It really is that concept of ‘being local,'” McEvoy said. “I think that really resonates.” He also acknowledged the role larger banks have to play in serving small businesses, but pointed out that there is a customer base looking for more personalized service, and that’s where community banks come into play.
His views provide valuable insights into how community banks can carve a niche for themselves in the small business segment, thereby ensuring their own longevity in a highly consolidated industry.
Source: American Banker.
