Revolutionizing Small Business Banking in 2025

Jim Marous (00:12):

Welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous. Small businesses are facing unprecedented challenges alongside remarkable opportunities as a response to the digitalization of engagement, an uncertain geopolitical landscape, and increasing consumer and customer expectations.

Jim Marous (00:34):

More than ever, they want their financial institution to be their partner in their journey. In this episode of Banking Transformed, we sit down with Manny Tocco, Chief Operating Officer of Business Banking at Citizens Bank.

Jim Marous (00:48):

Manny shares his insights on the major trends impacting small businesses, and how financial institutions must reimagine their small business banking model from the ground up, balancing high tech capabilities with high touch relationship management.

Jim Marous (01:04):

Whether you're a banking executive seeking to enhance your small business strategy, a FinTech leader looking for partnership opportunities, or a small business owner navigating the evolving financial landscape, and your banking relationship, this conversation will offer you valuable perspectives on creating meaningful banking relationships in a digital-first world that still craves human connection and expertise.

Jim Marous (01:26):

Small businesses face a complex landscape where economic uncertainties create financial pressures, and customer expectations of seamless engagement are increasing every day. More than ever, this massive segment of small businesses wants to partner with forward thinking financial institutions, offering modern financial solutions and specialized support tailored to their specific needs.

Jim Marous (01:57):

So, Manny, before we start, could you share a little bit about your background at Citizens?

Manny Tocco (02:03):

Yeah. Thanks, Jim. And appreciate you having me on this morning. I've been with the bank for 18 years. I've held a myriad of different roles in the commercial bank and business banking. I'm currently the Chief Operating Officer for the business bank. And my mandate is to oversee all of strategy, credit operations, and data analytics. Which sounds like a lot, but when it comes together between the three legs of those stools, it really helps us in terms of formulating a succinct strategy.

Manny Tocco (02:38):

And that really ends up showing up around our customer journeys, the jobs to be done that we are really here to end up supporting for small business owner operators. And then of course, our digital strategy as well, which is I think, one of the primary topics that we want to end up getting after today.

Jim Marous (02:56):

Yeah. And I know Citizens continually is researching the small business marketplace. What is your perspective right now on the most significant challenges facing small businesses with all this going on in the marketplace?

Manny Tocco (03:11):

Yeah. I mean, I think that there's an immense amount of uncertainty. We've had a higher for longer interest rate environment. You have that coupled with some broader macro geopolitical, economic conditions that make it difficult for small businesses operators to navigate those waters.

Manny Tocco (03:33):

So, what they're looking for from their bank, is they're looking for bankers to be able to provide insights and thought leadership. And also, from a technological standpoint, serving up insights that are relevant to them, with transactional analytics that are harvested out of inflows and outflows from their operating accounts.

Manny Tocco (03:52):

And all in service of being able to have a digitized platform that makes smaller businesses, owner operators be able to run their business in terms of being able to have a unified technological platform, rather than having disparate experiences that require them to toggle in between various different software platforms.

Jim Marous (04:18):

It’s interesting – just running a small business is difficult enough. Handling the financial aspects of that is even more difficult. I think we use the consumer base as a beginning point of what is usually built on the small business side, but their needs are so much more expansive.

Jim Marous (04:39):

We've seen a massive acceleration, a digital adoption across all banking segments. How are small businesses' expectations change regarding not just the experience, but their engagement level that they want with their financial institutions over the last few years?

Manny Tocco (04:56):

Yeah. I mean, look I think behind every small business is a consumer, and consumer finance has gotten a lot slicker in terms of innovation. You see a lot more embedded functionality in a variety of platforms, and they're looking for that Amazon like experience. And it's a couple of clicks and then you have a package on your door. They're looking for that same experience to end up showing up with our bank.

Manny Tocco (05:26):

And so, like I said, behind every one of these businesses is that consumer. And so, they're looking for unification amongst various different money movement platforms, whether it's being able to effectuate from a money movement standpoint around receivables, and from a payables aspect of things, and having that in one unified platform to be able to run the business effectively.

Jim Marous (05:53):

It's interesting, as you look at the relationship between small businesses and banking … you've done a lot at Citizens in updating and modernizing how you're dealing with those small business clients. But looking back a bit, and maybe even today, what are the biggest pain points in traditional small business banking models that needs the most urgent addressing by most financial institutions? Where is maybe the performance gap between what small businesses really need and what traditional small business banking models actually are provided?

Manny Tocco (06:33):

Yeah. I think banks have fairly dated mainframe platforms, and so the banks typically end up struggling with, “Do I build this? Do I need to acquire this? Do I need to end up doing a partnership with a FinTech?” And several years ago, I think banks took the posture of, well, if a FinTech is really going to come onto the scene and start to cannibalize bank's market share.

Manny Tocco (07:05):

And I think, Jim, it's been just the opposite to be honest. I think that banks including Citizens have done a really good job of leaning in on a variety of different use cases from a FinTech standpoint, whether it's been around fraud tools or it's been around serving up insights for small business operators to run the business. And then certainly, around technological tech stacks with respect to money movement capabilities.

Manny Tocco (07:33):

And so, what we found is, is that working with FinTechs rather than them being an adversary has actually ended up serving us extremely well in the market. And it's given us the opportunity to even outpace some of our peers as it relates to small business tech stack capabilities.

Jim Marous (07:53):

That's interesting. We talk about it in almost every podcast, the fact that now the ability to partner with solution providers, with FinTech firms as you mentioned allows us to move not only a lot faster than we ever used to – you look back over your career over the last 19, 20 years and it used to take us a whole year to implement a relatively simple innovation.

Jim Marous (08:16):

And now, expectations are and the ability to do so in a matter of months if even that long, is a great advantage. Plus, the ability to partner or buy technology out there that allows us to innovate at speed and scale, and at a price point that's reasonable, really makes it so that every financial institution can really move forward, be it in small business or in traditional consumer business in a way we never would have thought possible.

Jim Marous (08:47):

When you look at what Citizens has done, as you mentioned, you made a lot of partnerships, you've done some investment in digital transformation for the business banking segment – can you share some specific innovations that really resonate the most with your small and medium-sized business customer?

Manny Tocco (09:06):

Yeah. No, happy to do it. So, what we typically end up finding is, is that at micro and SMBs, they're the in-between. They're not quite a consumer even though they have similar behaviors to that of a consumer client. And then you have the upper end of a business banking or a lower middle market that's more commercial-oriented. And what invariably ends up happening is, is that it's the customer in the middle that suffers the most.

Manny Tocco (09:34):

And so, we ended up identifying that as an acute need because they didn't necessarily have all the infrastructure and the C-suite from a CFO or a controller standpoint to be on our access optimal platform that is highly customizable, and it's really more fit for purpose for commercial. And then, as you started to go down market, the online banking platform really just didn't have the capabilities there as well.

Manny Tocco (10:02):

So, we ended up launching a couple of years ago our cashflow essential platform, which is somewhere in between where customers can actually do ACH origination, they can end up implementing fraud tools within the platform. They can send out wires. So, what I would consider it as is really, Jim, a treasury light platform that fits squarely within the needs from an SMB standpoint.

Manny Tocco (10:22):

And then over time, we continue to end up having this metamorphous on the online banking and mobile platform, and investing there as well, because we do know that consumers alike, and then even small business operators, they really do want to end up being able to operate their business in one ecosystem.

Manny Tocco (10:40):

So, we continue to end up investing and developing within the online banking and mobile platform. But the cashflow essential capabilities have been a great stop gap measure as we continue to build out that broader breadth of capabilities within LLB and mobile.

Jim Marous (10:57):

It’s interesting, when we look at moving towards digital and bringing more digital capabilities to the table, I think every financial institution in the country and in the world is actually trying to determine how far do we go? Because I think we can almost digitize any traditional banking service in any way we want. But be it the consumer or the small business customer, or the corporate customer, they still want some of that human touch in many cases. Every customer is different.

Jim Marous (11:29):

How can you strike the right balance between digital and self-service and provide the human support that small business clients really need especially when you're looking at organizations that are vastly different from each other?

Jim Marous (11:45):

I know in my small business, I had a publication in the subscription business. So, that's very different than the corner retailer that maybe is serving food or providing apparel. How do you strike the balance between the digital capabilities and human capabilities? And how have you evolved as an organization at Citizens to strike that right balance?

Manny Tocco (12:09):

It's a great question, Jim. And I feel like in my role, I'm oftentimes positioned to speak about digital capabilities ad nauseam. And it's important, and also it's table stakes for us to have a right to win in the market, but we can't overlook the fact that humans still want to end up banking with humans. And there is that connectivity with the distribution market.

Manny Tocco (12:33):

And whether it's a small mom and pop retailer that's on the corner of Main Street, and they need to interface with the branch, we have really emphasized a true omni-channel experience. So, they should still be able to get service out of the branch, they can reach out to us within the contact center environment.

Manny Tocco (12:52):

Or in some instances, depending upon how big the client is and the breadth of the capabilities that we have with that client, the firm will end up dedicating a relationship manager to be able to support them to truly end up delivering a concierge-like experience.

Manny Tocco (13:09):

One of the things that we've recently done to be able to support and almost have as an augmentation model with retail, is we have a centralized team of virtual relationship managers that are – what I have coined the phrase of saying is hard wired with our retail network. And so, they are very much coordinated.

Manny Tocco (13:32):

And if a small business operator, whether it's a new customer or it's an existing customer comes into one of our branches, and the branch needs some subject matter expertise, they can flip a screen around, they can actually bring in a virtual banker in real time for that client to be able to have some of that connectivity, and for them to face off against somebody that has a little bit of deeper knowledge on all things from a business perspective.

Manny Tocco (14:00):

It's still early innings, but I will tell you the metrics have really pointed at this new operating model is starting to get traction, or getting great results from an NPS perspective. And I think that we can continue to end up scaling that platform and iterating and making it better over time.

Manny Tocco (14:15):

But I mention that because it really does underscore the point that whether you're an SMB or micro or an operand business banking customer, you still have to have this intersection between digital tools and that human interaction.

Jim Marous (14:32):

So, you mentioned the omni-channel experience. And one of the challenges with that is we have data. We have the insights, we're trying to use those insights to deploy to the customer base. But with an omni-channel situation, how does Citizens make sure that the experience is the same across channels? But just as importantly, let's say on a customer service level, how do you make sure that you're not repeating yourself as a person who goes from channel to channel to get an answer?

Jim Marous (15:05):

I have a case that I brought up in the podcast before with Delta where I had a challenge, and I went to the flight attendant first, and then I went to the chat bot, then I went to the website. Then I got a little frustrated and went to the social media outlet and never got the same answer.

Jim Marous (15:24):

But then finally, a human got involved about a week a half later and said they'd saw what I had done, they understood exactly the path I took. They understood that they're trying to fix every one of their channels to be very responsive, very proactive, and very integrated.

Jim Marous (15:39):

But they said, honestly, the integration part had been the biggest challenge because does the customer service rep get the same information or come up with the same answer as the branch would? Does it come up with the same as a chat bot may respond?

Jim Marous (15:54):

And how does Citizens deal with that? Because I know that that's like the secret sauce almost in trying to make it so all the channels kind of consistent working towards the same end.

Manny Tocco (16:06):

Yeah. No, it's a good question, and it's actually something that we continue to end up innovating on. And we haven't solved everything, it's a continuum of improvement. But I think one of the ways that that's starting to show up with us, Jim, is just around customer authentication. And making sure whether you're a customer on the consumer franchise, you're a customer of business banking or one in commercial that the authentication process is consistent throughout all of those divisions.

Manny Tocco (16:36):

In concert with that, it's making sure that there's harmony within our CRM platform so that there's call notes that are essential, whether you're somebody in contact center or business banking, or commercial, or in the branch network – that all of the colleagues can be singing from the same hymnal and understand what's transpiring with that customer in real time.

Manny Tocco (16:59):

Who was the last colleague to touch the customer and what was that interaction? Is there an issue that that colleague needs to be aware of? Is there even an opportunity from a product perspective? And that all needs to get properly catalogued within the CRM platform.

Manny Tocco (17:18):

So, that is something that we continue to end up building out. But I will tell you I think it's an issue that most banks have struggled with historically, but Citizens understands that if we want to end up showing up as one consistent franchise and we talk about one Citizens in a maniacal manner, this is a topic of conversation that we're going to continue to end up iterating on and improving.

Manny Tocco (17:44):

I would say that out of nine innings and using a baseball analogy, we're probably in the seventh inning in terms of getting to a state of nirvana in terms of really getting that CRM platform in complete harmony.

Jim Marous (17:59):

It’s interesting, through your whole legacy, through my whole legacy that even goes back further – the reality is we've talked about silos forever. And the silos are data silos as much as anything else. It's hard to bring them together, and more than ever because the consumer sees experiences in other industries on a daily basis.

Jim Marous (18:21):

They kind of get an idea of what's possible, and so they keep on raising the bar more and more. And it makes it so that we think we're catching up to the train, and then the train never stops. So, it's not like you're trying to catch something that's static, it's a moving target.

Jim Marous (18:36):

But as you said, I'm going to challenge it. It's admirable that you're in the seventh inning because I think when I look at, even on the consumer side, how broken some of those data flows, information flows, insight flows …

Jim Marous (18:51):

And even, on a reverse basis, the data and insight democratization across the industry, to be able to feel comfortable to give you your coin officers, your branch employees, your call center employees enough data so that the consumer isn't put in a difficult position, and they get more seamless experiences, as you said, a nirvana situation.

Jim Marous (19:16):

How do you see AI maybe changing that narrative, maybe making it easier? Maybe making it harder to bring that seamless integration of insight together?

Manny Tocco (19:29):

We talked about FinTechs earlier in the conversation, Jim, around being an accelerator, really being able to pick out the velocity as it relates to technological innovation. I think AI is going to take this entire discussion to the next level.

Manny Tocco (19:49):

I think when we talk about insights: insights historically you look back 10 years ago to how they were served up to customers, were fairly primitive. Now, I think what we're seeing is, is AI has the opportunity to turn insights into actionable insights, and have it be highly contextual for customers.

Manny Tocco (20:07):

And not just for it to be customer-facing through a chat bot functionality, but contextual for a colleague. And that colleague could end up being in the contact center environment or in the branch. Or they could end up being a coverage banker in a variety of different departments.

Manny Tocco (20:24):

But I think AI is going to be a key accelerator for that. Now, there's a variety of different toll gates from an AI standpoint. Got to make sure that we're operating with soundness and we're being prudent with respect to model validations in terms of different language models.

Manny Tocco (20:41):

But I do think that we're on the precipice of something that is incredibly exciting. And I oftentimes, Jim, will get questioned about AI and how do you feel about AI? Is it going to replace that human connectivity? I think it's another arrow in the quiver for our bankers and for all of our colleagues.

Manny Tocco (21:01):

It's going to create some automation, but it is certainly going to end up making our jobs, I think, a lot better in terms of almost being more precise and not talk track with our customers.

Jim Marous (21:16):

It's interesting when I look at AI and the way we talk versus the way we walk in the finances services industry, we're doing a really good job, I think with the talk and walk when we're talking about efficiency, effectiveness, risk, fraud, all the internal aspects of how AI can be used.

Jim Marous (21:35):

I think there's a bigger gap, or I see the bigger gap when it comes to customer deployment, customer insights. You mentioned it, the whole risk model and being able to do this. How do you believe Citizens is dealing with the whole ability to go from a risk avoidance mentality to a risk management mentality as it comes to AI?

Jim Marous (21:57):

Because I think when I look at banking innovation overall, and Citizens as we mentioned before in our podcast, I'm really impressed with all the different innovations that Citizens has taken under their helm in the last several years, and going back even more than five years, but more than many financial institutions in moving forward.

Jim Marous (22:19):

But, that takes management looking at risk in a different way and saying, "You know what, we may make a mistake here and there, but the amount of value we bring to the table is significant enough to balance it."

Jim Marous (22:32):

When you're talking about AI, when you're talking about innovation, how does Citizens deal with that whole risk narrative to say, "We can't stop doing things simply because we're afraid that something may not go perfect?"

Manny Tocco (22:45):

Yeah. We've set up an AI council that's an enterprise-wide initiative. And it's a group that's maniacally focused on the step change around AI within the industry. It's working with regulatory bodies and making sure that we're on the right side from a compliance standpoint.

Manny Tocco (23:10):

I would say that there's still a high degree of caution related to AI, which is I think the right approach. And when I say caution, I think everybody is cautiously optimistic with it, but Citizens is not taking a haphazard approach with AI deployment.

Manny Tocco (23:28):

I think it's going to mission critical that "Is" are dotted and "Ts" are crossed, but the fact that we've got the right vector of leadership surrounding this and we're thoughtful as it relates to an enterprise-wide clear view around a committee and looking at how we're deploying AI, I think is the right approach.

Manny Tocco (23:51)

I think what could be dangerous for other FIs especially ones that are potentially on the smaller scale, is that when you're not really thinking and you're looking at some of the capabilities in this advent of AI and the art of impossible – if you're not careful, you could be on the other side of not a great situation potentially.

Jim Marous (24:15):

Yeah. And it seems we'll take a step backwards here a little bit on the operational side of that small business relationship. But at the end of the day, the small business customer wants you to know them and understand them, and then reward them for that relationship.

Jim Marous (24:32):

And it’s interesting, the most fundamental foundational level, part of that is also making banking easier for the small business customer. A small business customer is in some cases, as you mentioned earlier, sometimes a big consumer of banking relationships. Sometimes it's the same as a consumer banking relationship.

Jim Marous (24:57):

But sometimes, it includes things like capital, treasury, wealth, all these other elements. How is Citizens streamlined? If I have a relationship with you already, how has Citizens streamlined the ability for me to expand a relationship, and for Citizens to be able to achieve organic growth?

Jim Marous (25:16):

In other words, if I already have a traditional depository relationship, how easy has Citizens made it for me to, let's say, apply for credit? Maybe open up a credit card relationship? Maybe deal with wealth or a treasury service?

Jim Marous (25:34):

How easy is that process as opposed to the traditional start from square one every time?

Manny Tocco (25:40):

Yeah, I know that's another great question. Some of it comes down to just making sure that anything that we're delivering from a digitization standpoint, that we make the customer feel like we know them. That we're not being duplicative and asking them all these redundant questions. Like, "What's your tax ID number? What's your social? What's your date of birth?"

Manny Tocco (26:04):

So, what we've been doing is, and we're still embarking upon all of this in terms of how we bring in certain capabilities – but when we ask a customer, we prompt them for a query to fill out various different fields on an application as an example. We're not going to ask them again.

Manny Tocco (26:22):

So, we're going to make sure that if they have a business checking account, then they will also apply for a small business credit card or a loan or line that we're prepopulating as many fields as possible for that customer to make sure that that experience feels natural.

Manny Tocco (26:42):

That they're already on board with the bank, “Like please don't ask me these questions again. Just make this simple for me.” And that is one of the things that we're really trying to get after, Jim, is trying to make all of our experiences really delightful.

Manny Tocco (26:56):

Coming back to that example as it relates to Amazon, if you know me, make sure that the fields are already prepopulated, and make the application process that much easier.

Jim Marous (27:07):

It's interesting because it seems so easy, but in the banking world with all the traditional things we have in our legacy models, our back offices, it is not always that easy. And my example, Delta, that was one of the things that came to me, and said on the call they made to me going, "We are very sorry that you had to re-answer the same different question five different ways. We haven't really integrated these great customer service channels. Each one works very well on it's own, but we haven't brought them together."

Jim Marous (27:40):

And the customer gets frustrated because they're saying from their perspective, "I've been a customer for 10 years, you still don't know me?" You go, "Oh, yeah, I wish it was that easy." And there's aspects of that. But again, it's the deployment of data and analytics in a way that's really effective from the customer perspective. So, let's take a short break here and recognize the sponsors in this podcast.

[Music Playing]

Jim Marous (28:06):

Welcome back to Banking Transformed. Today, I'm joined by Manny Tocco, COO of Business Banking at Citizens. We've been exploring the challenges, opportunities, and strategies raised in small business banking.

Jim Marous (28:19):

Manny, we often hear about the importance of speed in banking. How is Citizens working to compress timelines, not just applying for or getting a service, but actually for decision-making and service delivery?

Manny Tocco (28:34):

Yeah, no it's a great question. The answer to that question, Jim, I think is different depending upon a used case. I'll give a little bit of a coming attraction from a micro SMB perspective within business banking.

Manny Tocco (28:52):

We are about to deliver, and we're actually in MVP1 right now, but by the end of June, we're going to deliver an internally created solution for scored underwriting for up to 250,000. That is like an instant approval process for customers, it's a very sleek digitized app application.

Manny Tocco (25:14):

We are going be having a unified digital account opening component to that as well so that it really creates the most digital shopping cart experience if you will, where customers can then end up determining, do you want to end up applying for credit? The fields are automatically populated. Are you going to end up opening an account? Is there a merchant play there as well if we need to end up accepting card?

Manny Tocco (29:39):

So, as far as I would say the speed to be able to apply those approvals, it's merely … it's almost completely instantaneous from a credit perspective.

Jim Marous (29:53):

Wow, it’s interesting, we talk about how difficult credit is, and I gave the example on a consumer side with a bank in Poland a number of years ago. There was something on the mobile app that basically, 90% or 85% or something like that, of their customers could actually just do a tap in and get a line of credit.

Jim Marous (30:15):

Now, what was interesting was to do that for 80% of the customers, they lowered the amounts, and made it so that more and more customers could get it. Maybe it was simple as $100 so they could make ends meet at the end of the month, or make a rent payment whatever it may be.

Jim Marous (30:31):

But on the other hand, the ability to say, "I need more," and being able to push another button, made it so that as it sounds like from your perspective, the basis of it is to give it to as many customers as possible, but we have ways to move to the more traditional method when necessary.

Jim Marous (30:49)

And I think, again, it's really looking at the way we do banking from a digital way, without simply digitizing old processes. It's a very different perspective because you say, "What does digital give us and how do we reset the expectations and the way we used to do things?"

Jim Marous (31:12):

All these new nuances, all these new innovations, all these new ways of deploying even AI impact employees, because employees whether they tell it us directly or not, are daily concerned about is their job going to be replaced by robots, by AI, by digitalization?

Jim Marous (31:32):

How does your organization communicate to employees to make them so that their fear level reduces? And where they can actually feel like they're going to be part of this process. Because I think we take that for granted, but at least in my podcast, the number of companies I've interviewed, the difference between those that are successful and those that are not are often simply in how well they communicate to employees to make sure they're onboard for the changes we're trying to implement.

Jim Marous (32:02):

Because you've seen in your history, I've seen in my history the branches, the humans, the call centers, they have a way to put a wrinkle into things so that the things that we think are going to be easily implemented may not be done quite as well. Or a branch, a person starts to open a new account digitally and marches into a branch, and the branch starts from square one because they only get credit if it's actually started at the branch.

Jim Marous (32:31):

How does Citizens communicate across the board in a way that makes your employees realize we're all moving forward together?

Manny Tocco (32:39):

Yeah, we put a lot of effort and energy into colleague development. And two years ago, we ended up launching a platform called Talent Matters. And every single colleague within Citizens takes part in Talent Matters. It's a series of various different questions that really starts to size various attributes around colleagues, and is a tool for managers to end up leveraging to help colleagues in their career journey.

Manny Tocco (33:14):

And so, as you talk about whether it's AI or it's automation or what have you, one of the things that we really lean in our colleagues with is making sure that they're ready for that next step in their career.

Manny Tocco (33:28):

Whether it's a teller that is aspiring to become a manager or it's a coverage banker looking to end up getting into a leadership role within commercial or business banking, the platform in concert with learning and development is really foundational in terms of us getting our colleagues to where we need them to be.

Manny Tocco (33:47):

And invariably, look, things change with jobs. You have the advent of technology, and I think if you asked Henry Ford what would be the next way for people to get around, I think he said that there would be two horses instead of a car pulling a wagon.

Manny Tocco (34:07):

So, there's always going to be new tools and technology that is introduced. So, you're not going to stymy growth from that perspective, but I do think that it's important that you lean in with colleagues, and you make sure that they have the proper air cover, and inspire them to end up developing themselves. And for the managers to develop them into getting into proper roles for future opportunity.

Jim Marous (34:31):

So, you go back aways in the small business and commercial space and a lot has happened. And we've kind of alluded to the fact that the change that has happened has been massive, and it keeps on getting faster.

Jim Marous (34:47):

As you look, let's say just ahead three years because God, we used to say, "In the next five, in the next 10 years," and now we got to cut this parameter down because things are happening so fast. But as you look ahead one to three years, what excites you about the future of business banking, and what's going to be possible?

Manny Tocco (35:07):

I think it's continuing to lean in with our fintech partners. I'm incredibly excited around just how transformative data and analytics has been over the course of the last several years. And taking what used to be very arduous tasks, even around credit delivery, Jim, and being able to serve them up in an embedded environment for customers to quite literally have a couple of clicks and be able to receive the liquidity that they really need in the form a debt capital instrument to run the business …

Manny Tocco (35:43):

It is leaps and bounds where we were even 10 years ago. So, that really ends up getting me excited that you're able to support the customer where they are without a whole lot of belts and suspenders. And for owner operators, that can continue to work in their business.

Manny Tocco (36:04):

And eventually, they can start to work on the business. But despite what a lot of bankers think, they don't really have a lot of interest in filling out applications and coming into branches. And branch colleagues are great, and they're always there to end up supporting customers, but they're really there to run the business.

Manny Tocco (36:25):

And so, between the data and analytics, and the continuation of digital enhancements around money movement platforms, and just making it easier for customers, really gets me excited. And then coupling that with contextual AI that is almost a co-pilot in a banker's pocket to be able to have more meaningful conversations with customers, and be true value add.

Manny Tocco (36:55):

And the consultative is I think going to end up really accelerating small business banking to where we were even 10, 15 years ago.

Jim Marous (37:08):

It’s interesting, I've had conversations about small business banking with others and it hit me just when you said that almost at the exact same time that we always talk about the way we serve customers, and how customers can open accounts, and their credit and all this.

Jim Marous (37:24):

But I was a small business banker way back in the dark ages. I remember how hard it was to try to find information, or to understand the companies I was asked to go and visit, or that walked in the branch. And it's interesting because now, there's so much information out there, so much data out there. There's so many things that you don't have to ask the small business about to be able to understand about their business, and just the normal dialogue.

Jim Marous (37:53):

You talked about the co-pilot ideas. And the tools that are available without having to look at long financial statements and have a young business banker that's just come out of university try to understand what the heck those say.

Jim Marous (38:07):

We have the capability now as financial institutions to understand a small business better than the small business owner does, because in many cases, they're not skilled in that set. They were skilled at making apparel. Making food, being a chef. All kinds of other things, but running the business is not necessarily their forte.

Jim Marous (38:32):

We have the capability now with the data out there, with the insights out there, with the marketplace out there, with social media out there to really analyze, help us analyze a business. Not only from a get to know them and understand them, but even in a post-account opening basis to analyze is there something going wrong with that business?

Jim Marous (38:52):

That analytical side of what we used to do, and why we didn't want to take much risk is because we weren't doing a really good job of managing what happened after the account was opened until it came up to quarterly time or whatever. And now, we can do that from a consumer basis all the way up to a commercial basis.

Jim Marous (39:12):

And I think to your point, I think overall, that technology of data and insight, both on the customer service side, but also on the account opening, the financial services side, is really a game changer because it really makes is so that a brand new business banker could get their feet on the ground very quickly and provide value to a small business person – that really, it sounds strange, but I'm doing it – doesn't have time to run their business. They only have time to do their business, and there's a big difference there.

Manny Tocco (39:47):

Yeah, I couldn't agree more. When you talked about risk a little bit, Jim, and bankers tend to end up evaluating a risk profile based off of historical performance. And now, with the advent of data and analytics, you can get real time insights, it's going to be much more predictive in nature.

Manny Tocco (40:11):

And really, looking at alternative type models to be able to ascertain credit worthiness, what's happening in that business historically is interesting. What's happening in the business right now is even more compelling.

Manny Tocco (40:27):

And being able to have a little bit of a peek around the corner potentially around that predictive analytics, really sets us up in terms of really sound risk management. But also, being able to end up positioning the bank in a proper manner from a product standpoint.

Manny Tocco (40:43):

So, I almost think, Jim, when I look back and I'll be a dinosaur in 15 years from a career perspective – but it's going to be almost unrecognizable in terms of just how prepared our bankers are, or going to be. And they are prepared today, but how prepared they are going to be when they go out to go see a customer.

Manny Tocco (41:07):

And when I was still in coverage, and Jim, you mentioned when you were a banker in the dark ages, how much leg work did you have to do just to be able to sass out what's happening here with this customer? What are the trends within the industry?

Manny Tocco (41:23):

And you're cobbling it together between some public domain information and DMV and others, and now, it's really just a couple of clicks and you're able to get a very thorough download to have a productive conversation with a customer. That's very meaningful.

Manny Tocco (41:39):

It's meaningful from a time save and productivity standpoint, but when you can walk out and you meet with a customer and you know a lot about their business before you even have to ask a question, that's impressive.

Manny Tocco (41:53):

And honestly, I think that that's what customers are really expecting from the interactions that they're having with their banks over time.

Jim Marous (42:00):

Well, you look at it and so much happened in the marketplace overall, but you now have the ability to say, if there's a lowering of interest rates coming in the next three months, instantaneously knowing which businesses will this have the biggest effect on? Both from a credit standpoint, but also, from a standpoint with tariffs coming in certain industries, getting instantaneously from my big bank brothers that Citizens bank will be able to feed.

Jim Marous (42:30):

Here's the customers who are going to be impacted by the 15% tariffs from Canada because these companies we already know are dealing with Canada in these ways. That type of stuff would never have been available.

Jim Marous (42:43):

You gave me a lot more credit to think that I was doing a lot of research on these companies before I visit them. Invariably, they were a lot but you're simply going, try to gland hand, take them out to lunch, hope you got business. We were providing really from an inside and from a, “I'm going to help you do your business.” We brought very little to the table because we didn't have the tools.

Jim Marous (43:06):

We had a big call sheet, we had visited so many companies, but now, we can evolve and I could get a call sheet today that can reflect news from last night or from 25 minutes ago. That is extraordinarily exciting from a perspective of saying, "We can make it so that everybody wins."

Jim Marous (43:26):

This is a value transfer. This is where the business banker wins, the financial institution wins. And most importantly, the small business wins because again, very few of these small modest sized businesses or even big corporations, are able to work on how to make my business better from a financial standpoint.

Jim Marous (43:45):

So, Manny, I really appreciate the time with you today. It's been a great conversation. You bring a lot of perspective to the table. And also, as I'd mentioned before, Citizens is at the forefront of some of the things that are going on in the marketplace. And I think that to model against you is not a bad path to take.

Jim Marous (44:04):

And I'm going to end with this question, Manny: there's a lot of financial institutions that are playing catch-up. And I mentioned it yesterday in an event that I was speaking at, that being a fast follower is no longer an advantageous position because that only puts you falling further and further behind.

Jim Marous (44:21):

What suggestion would you give to financial institutions today at a very basic level if they want to serve their small business customers better?

Manny Tocco (44:31):

I think you got to have a voice with the customer. You have to understand what's important to them from a jobs to be done standpoint. I think one of the biggest challenges and pitfalls that banks will make is that they think that they know what their customers need without really thoroughly listening and understanding what is it that we should be trying to cause to make our small business banker, our small business customer's lives easier, and make it easier for them to bank with us?

Manny Tocco (45:03):

Start from that lens, and then really, account for a very thorough customer journey as it relates to how the technology works, how does it show up in the branch network through omni-channel.

Manny Tocco (45:20):

The last thing you want to do is create disjointed, disparate customer experiences where they're authenticating on one platform and it's different than another, or fields are not pre-populated. You have to make it sleek, it has to be completely seamless.

Manny Tocco (45:35):

And whether that's a conversation that's happening one-on-one like this, Jim, from one department to the next, or it's in the way that the customer is interacting with the tech stack. So, yeah, I would say customer journey, jobs to be done, and really having that maniacal focus and listening to what those customers need.

Manny Tocco (45:57):

That will end up being a guiding hand in terms of what you need to develop and make sure that you're leaning into the right use cases, and not burning unnecessary calories.

[Music Playing]

Jim Marous (46:10):

It’s interesting, in a very simple statement, you gave a laundry list of about seven things because you got to make banking easier, you got to make banking better, and then as you referenced at the very beginning, you have to know your customers. Not from a segment basis, but from a one-on-one basis.

Jim Marous (46:27):

The beauty of digital is with digital information with data and insight, knowledge is travelling so fast. We have the ability to do that much better than ever before. We actually can have that one-to-one relationship that Don Peppers and Martha Rogers used to write about a long time ago. But I think, be it the consumer banking or business banking, I think that's a game changer.

Jim Marous (46:51):

Manny, again, thank you so much for being on this show. I really appreciate it.

Manny Tocco (46:54):

Thank you so much, Jim, I enjoyed it. It was a pleasure. Take care.

Jim Marous (46:58):

Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoy the work we're doing, please give us a positive review. Finally, check out my recent articles on The Financial Brand, our fantastic research on the Digital Banking Report. And keep listening to Banking Transformed Podcast.

Jim Marous (47:17):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, and our audio engineer and video producer, Will Pritts.

Jim Marous (47:26):

If you have not already done so, remember to subscribe to Banking Transformed on both your favorite podcast app and YouTube for more thought-provoking discussions on the intersection of finance, technology, and leadership.