You’re right, most of you do use all of these tools. But how many technology companies are your customers?

Hmmm, was that a scratching record and crickets that I heard in the background?

I was reading a post on OnStartups the other day and saw an interesting statement:

Best Bank for Working with Startups:

Silicon Valley Bank

In case you haven’t heard of them, Silicon Valley Bank has more than $19 billion in assets and pretty much caters to the startup community. Here are some interesting stats:

• 50% of all VC-backed companies in the US bank with Silicon Valley Bank
• 2/3 of all VC firms bank with Silicon Valley Bank
• 70% of Businessweek’s Top Entrepreneurs are Silicon Valley Bank clients (May 2011)
• 68% of WSJ Top VC-Backed companies are Silicon Valley Bank clients (March 2011)
• Only global bank dedicated to the innovation sector

Silicon Valley Bank has branches in the startup hotbeds of the US and globally. The way that Charleston, SC is growing, I wouldn’t be surprised to see a branch here soon.

Now correct me if I wrong, but right now technology is considered a growth industry. In fact, over the last couple of years, you hear a lot more about startups in general. Is your community bank or credit union pursuing these new prospects? I promise you that your big competitors, such as Bank of America, Wells Fargo, TD Bank, Citi and JP Morgan, are.

One thing I’ve heard over and over from entrepreneurs is they try going to a community bank or credit union first, but are turned down. The larger bank however, accepts their business and works with them. Because that larger bank helped them get started, entrepreneurs feel a fierce loyalty to them.

This is an instance where “all our decisions are made locally” comes back to kick you in the proverbial tail. Your chance of getting any future business with this company, when they are successful later, is pretty low. Your only hope is that the big bank will do something, such as lower a credit limit when they need it, that will cause extreme dissatisfaction.

The sad part is I see this happen so many times here in Charleston. The Charleston area has been in the news lately for being entrepreneur friendly. Here are a few awards the area has received recently:

• #11 Milken Institute’s “Best-Performing Cities 2011”
• #1 nationally as the top tourist destination in America, Conde Nast 2011
• #1 2011 Metro Areas with the Largest Percentage Growth in College Degrees over 10 Years, Brookings Institute Study, Wall Street Journal
• #8 2011 Best Cities for Job Growth – Mid-Sized Cities, New Geography
• #3 2011 Small Business Vitality Scores, The Business Journals
• #4 2010 Small Business Vitality Scores, Portfolio
• #7 2009 Best Cities for Technology Jobs, Forbes
• 2009 Best Place for Start-Ups, Mount Pleasant cited as best city in South Carolina, Business Week

Even with all of that, I don’t know of a single community bank or credit union in the area that actively pursues the startup community. In the past I’ve worked with BarCamp Charleston and contacted local FI’s about sponsoring the event. In the three years of BarCamp Charleston being held, no bank or credit union has ever been a sponsor.

This is a huge opportunity that is being missed. It’s sad to say, but it almost seems that because BarCamp is organized by a bunch of enthusiasts, it’s not deemed a “worthy event”. I noticed that plenty of FI’s send representatives to local chamber events. If they only knew how many successful business owners attended BarCamp.

Now, in your community I’m sure there are plenty of businesses that would love to bank with someone local. My advice is to get them while they’re still in a growth stage and can really use your financial expertise. Take the time to meet with them and learn their business. Because when they become that million dollar company and big bank comes-a-calling for their business, they’ll remember you took a chance on them when they needed it. Besides, Silicon Valley Bank will be more than happy to take them off your hands.

Over the past couple of years I’ve heard more and more about bank and credit union customers wanting their FI to provide more financial advice. A recent post by Jeff Marsico brought this issue up again. In his post, Jeff described his latest insurance shopping experience. In the end, he ended up dropping his agent because he was able to find a 20% cheaper rate on his own. Rightfully so, he felt his agent should have been a bit more proactive and had his best interest in mind.

This prompted him to wonder about customer service levels at financial institutions. He also mentioned that a competitor did a survey of FI customers and concluded that “both businesses and individuals wanted advice from their FI.” My question is, “exactly what advice do customers want?”

Let’s be honest, most people really aren’t overly concerned about their finances. What I mean is, they aren’t actively making and following budgets, tracking their expenses and updating their asset allocations. I’m sure quite a few resolutions were made this year about getting finances in order. But I don’t think FIs are asking the right questions.

For all those polls that say customers want financial advice, I don’t see any that mention what type of advice customers actually want. From what I can gather through online searching, banking advice seems to consist of:

1. How to save money, in general
2. How to save money for specific goals (house, car, education, vacations)
3. Using direct deposit
4. Using budgeting tools
5. Avoiding fees
6. Finding the right checking or savings account
7. Finding a good loan/credit card rate

Now I know that most bankers and credit union employees will happily discuss any of those topics with their customers. But are customers meeting with their bank or credit union to go over these topics? Given the low branch traffic, I’m confident in saying “no”.

However, this brings up another question. How do said customers want to receive this financial advice? Generally, most people tend to meet face-to-face with the person they want advice from. I know PFM can be used to offer goal management, products and services that customers may be interested in, but that’s not really “advice”. Is online a better channel? What about workshops or lunch-n-learns?

If financial institutions really want to go down the road of proactively offering advice, they first need to find out what their customers want. Instead of tweeting generic advice, send out some direct mail and surveys to get their opinion. In this environment, getting to know your customer better can only be a good thing.

Photo by Oberazzi

Interested in PFM? Check out these companies and products:

PFM on Kwikstarter

I know I don’t miss the endless email replies with co-workers. Using enterprise social networks such as Yammer, Socialcast, or Sharepoint can have a very positive effect on internal collaboration. Using a “Facebook” or “Twitter” style of communication can allow you to get answers faster by being shared across the organization.

Company executives have been looking for ways to increase communication in their organization. I believe these tools will fill that need nicely.

Socialcast Kwikstarter Profile
Yammer Kwikstarter Profile

I could see them releasing a new Walmart app similar to Starbucks, where customers can tie a Walmart gift, credit or MoneyCenter card to the app to pay for purchases.  This could potentially lead a major push into widespread acceptance of mobile payments.

Hello, I’d like to welcome you to the new home of the Banking Kismet blog. I know a lot of you have been waiting to hear about my future plans since I announced my resignation from my former employer.

Well, I’d like to officially announce the launch of my new company, iMazuma. I’ve always wanted to be an entrepreneur, and the timing seemed right. Over the past few years, I’ve developed a deep passion for the banking industry. I’ve also come to love the credit union industry.

In both industries, I’ve found like-minded individuals that share my passion for technology, customer service, financial literacy and other things finance related. Stepping out on my own is one way that I can help build up the financial services industry.

While working at the bank, I discovered that financial service organizations don’t always have the tools that will help get work done efficiently. My former job involved solving such problems. But now I’d like to do that on a much larger scale.

I have plenty of ideas about one-off applications that can really help streamline banks and credit unions. Hopefully, future customers will find them just as useful as my former co-workers did.

In the coming weeks, I plan to launch the first application, KwikStarter, which is an online directory of financial services vendors. Please make sure to subscribe to the mailing list to keep up with new announcements.

If you’re interested in being a beta tester, please send an email to kwikstarter@imazuma.com

Thanks for stopping by and I look forward to working with you in the near future.

Photo by NASA/Wallops