Notable Quotables: Five Star Bank on Growth, Technology, and Customer Experience

Sal Trifilio

Sal Trifilio

April 15, 2022

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Five Star Bank is a $5.5B financial institution headquartered in Warsaw, New York, with more than 45 branches located throughout the region. The bank has more than 600 employees dedicated to delivering exceptional customer service, who pride themselves on their commitment to and involvement within their communities.

A part of that commitment is in supporting small businesses, and in 2022 that requires meeting borrower’s changing expectations of quality service.

As this year’s Small Business Week approaches, we’re revisiting a conversation we had with Five Star Bank Chief Administrative Officer Sean Willett as part of a panel discussion we moderated at Bank Director’s recent Acquire or Be Acquired conference.

The following quotes have been transcribed from our discussion and cover Five Star Bank’s perspective on a wide range of important topics from growth strategy, to expanding their digital offerings and prioritizing the customer experience.

On Five Star Bank’s growth strategy

“It’s all about profitable growth on our core lines of business,” Sean says of Five Star Bank’s strategy. “We’re focused on maintaining strong credit discipline and sharp expense management.”

Put into practice, that means “weaponizing our data and our insights to better understand our customers so that we can really start to match products and services with their journeys and deepen those relationships.” Sean believes “through that understanding, [Five Star Bank can] identify similar customer opportunities for the institution.”

Sustaining this growth, according to Sean, will require “using technology and digital tools like Numerated to solve for the needs of the bank, and finding opportunities to monetize those through other products and services such as Banking-as-a-Service, payment strategies, and digital currency like Bitcoin.”

On the shifting borrower expectations

While consumer and commercial lending are worlds apart in terms of digital adoption, banks and credit unions are starting to realize that consumers and business owners are often one in the same when it comes to expectations of quality service.

As Sean puts it “I honestly think that small businesses are really no different, and we saw that validated through the [Paycheck Protection Program loan] process. 

“Small businesses have three core needs. First, they have a need to get paid and get paid quickly. Second, they have a need to really understand who their customers are and how they grow their customer base. And third, they want quick access to capital to keep their business growing. PPP certainly accelerated digital adoption for consumers … we would be foolish to think that it didn't also accelerate for small businesses.”

On the threat of alternative lenders

Today, there are a wide range of alternative lenders offering small businesses a full line of products and services outside of traditional financial institutions. As a result, banks and credit unions are starting to feel the heat.

“Our small businesses footprint is really under assault competitively from non-bank financial incumbents,” Sean said. “They're establishing a footing with those small businesses through payments, and then from there they deploy traditional banking products and services. To stay competitive, we feel as though we're looking at our full product offering, making sure that we're not just solving for the payments equation, but we're also solving for the small business lending equation.

“So, as a creditor, we view it as a great opportunity to grow with micro businesses, so that we're always there for them. We can help a small business today, and we can meet their needs when they get to a million dollars in complexity. And knowing there are certain things on the Numerated roadmap to handle those million dollar, more complex credits, makes it all easier.”

On investing in business banking technology

Most traditional lenders today, sans the national megabanks, need to be strategic about every dollar they invest in technology. Five Star Bank is no different.

“It’s probably not going to come as a shock to anybody in this room,  [but Five Star Bank] doesn’t have $12 billion to spend this year on technology,” Sean said. “So first and foremost, we approach these investments from a complementary perspective.” 

Five Star Bank, he says, is “hyper focused on solving for the needs or the problems of our traditional lines of business, but then we're also looking towards the future to see if we can monetize this investment elsewhere. Can we deliver banking-as-a-service with non-bank financial partners? There’s a bit of a dichotomy there in terms of community banks are relationship driven and you're partnering with firms that are in some ways competitors, and again, the way that we look at it is we tend to focus outside of our footprints, so we're not in direct competition with our core lines of business.”

On continuing to improve the customer experience

Financial institutions like Five Star Bank prioritize customer service and are looking toward their partners to help them to continue to improve here.

Sean notes, “the way some of these non-bank financial partners are approaching the customer experience, there's quite honestly a lot to learn from. We are going to gain data and insights by using their platform, we're going to bring that insight back to our core lines of business, and, in turn, we're going to make them smarter and position them for success.”

“So we see these technology partnerships, like Numerated, as a way to diversify revenues, but also a fantastic learning opportunity. I think if you're a bank management team or a board member, look at this as an opportunity to create a new channel that quite honestly, many of your customers prefer. Customers want to go down the road of digital lending, they don't necessarily want to walk into a branch to do their business banking.

“Numerated is another channel in our toolbox that we can deliver to our customers, and another way for [Five Star Bank] to create revenue–to continue to be a viable financial institution.”

On using technology to create consistent experiences

As Sean describes it, one of the main benefits of using technology for business banking is its ability to establish a consistent borrower experience.

Sean said “the technology [Numerated] provides, gives us the ability to have a consistent client approach, a consistent sales approach, and, as a result of that, massive efficiency gains. At the same time, we are reducing complexity and operational risk because we’re now accessing the same consistent information coming into the back office, [allowing an] increase in throughput. We really view Numerated now as a table stakes, as like any other channel in which we can engage with our customers.”

With the right technology, Sean says, they no longer need to choose between a high-level of customer service and digital efficiency. “Now we can do both. We can bring our relationship management skills and capabilities to the table to be consultative with a small business, and then, in addition, provide the best-in-class digital experience, thanks to Numerated.”

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