By Joy Pettid | President

When bankers are asked about new business, we sometimes hear:

  • Not credit worthy for loans
  • Risk of going out of business
  • Too small to bother

Granted, this may apply to some new business start-ups – but not all! When we say “all”, how about over 1,250,000 new business start-ups in the FIRST QUARTER of 2024? The statistics aren’t in for the full year but should be similar for a yearly tally of over 5 million. Of these, 1.8 million firms are classified as “likely employers” which means that they are predicted to have more than only one person in the firm and are therefore classified as SMBs.

In conversations with Bill Isacc, President of Secura Isaac and former Chairman of the FDIC, he noted:

“Many banks miss the boat on new businesses since they view startups generally as not credit worthy. In fact, many new businesses are well funded today, resulting in a missed opportunity for overly cautious banks.”

Bill should know as he also was recently Chairman of Fifth-Third Bank, one of the country’s largest regional banks with 1,100 branches.

BUSINESS VS CONSUMER

Banks spend millions to attract consumer accounts and for good reason as they need deposits to support required balances for loans. Yet, when compared to business accounts, they are less profitable. While a consumer may open a checking and even a savings account, businesses likely need four accounts. They are:

  • Checking– average balances of SMB’s are $12,100 vs. consumer of $5,600
  • Saving Accounts, Money Market or CDs– for periodic cash needs like tax payments
  • Credit Cards– for both the owner and other employees as well
  • Merchant Services– for payments and transactions from customers

The deposits and fees from a business relationship can dwarf the consumer profit contribution.

In fact, many banks today are offering cash bonuses to businesses for opening new checking accounts. As an example, a large US regional bank is offering a $400 or $1,000 cash bonus for new checking accounts of $10,000 and $25,000 respectively. This certainly shows they recognize the value of a SMB relationship.

It’s widely known that if a business has three or more accounts with their bank, the likelihood of them switching is close to zero. Of course, these odds increase if they have been turned down for a loan or their personal banker leaves, but who can predict this?

So, where can banks consistently find new responsive businesses for their targeted marketing efforts?

TIMING IS EVERYTHING

Before a new business can open a checking account, they first need to register, receive a FEIN number and related documents. So, obviously the sooner banks know about this new business, the better the chances for them to acquire a new business customer.

That’s where Crosslists comes in. On a weekly or monthly basis, we supply the names and addresses of new businesses for any geography. Most banks already have a mailing campaign offering bonuses for new checking accounts and all that is missing is the data and list of new businesses.

Our success has been with all bank sizes; national, regional and large local banks. A privately held bank located in several states with over 100 branches reported a 2.8% response rate on just a 10,000 record mailing. That bank group converted 4% resulting in nearly 400 accounts opened. There is NO call to action in their mailings. This success story is consistent among all of our financial clients.

How to Get Started

Feel free to contact me at Joy.Pettid@Crosslists.com or call us 816.697.3306

A Word About Crosslists

Some 35 years ago, Crosslists started to serve the non-profit and religious market. Jean Pettid and Mark Hellstern were the founders and have since retired. Starting in the late 1990s, the firm began compiling new business data under the direction of Joy Pettid, our current President, and chief data guru.
Crosslists has grown steadily in both clients and staff and now serves clients in a variety of markets including financial services, technology, office products and premiums, to name a few. Visit our website to see an update on how many new businesses have started, this past week, month, quarterly and year. To learn more visit https://www.crosslists.com/.