Throughout the years it has become more evident that small banks must catch up to current technological innovations. These small financial institutions include credit unions,community and regional banks and are modeled similarly to businesses and they are losing out to corporate banks. Small banks face revenue challenges, technological innovations, lack of loan demands and budget constraints. According to Bankrate.com “The combined assets of the 10 biggest banks are a staggering 9.72 trillion,according to Bankrate estimates.” Corporate banks have taken the market share away from small banks. The small banks market need for assistance needs to be addressed to preserve and compete against larger corporate financial institutions. Zikher’s business model seeks to preserve small banks by providing an affordable commercial/residential loan origination tools to be competitive with large banks.
Small banks provide 2 billion in assets per credit union and community banks provide 6.5 billion in assets per bank. Advancements in technology have created a business need to utilize a private cloud platform to protect customer data and promote efficiency. According to S&P Global, “Banks spend 30% of their total IT budget per year on private cloud and market analytics.” This proves the market need is there and customers want transitional improvements in the small banking industry.
Small banking customers are tired of not having instant access to up to date information regarding to their loans. Large banks easily provide real time tools and this is the reason why Zikher was created and founded. Rising costs to keep up with the advanced and affordable technology is the reason why Zikher created a business model that aids small banks. Zikher provides a fighting chance for small banks to fight and compete by allowing an affordable pay as you go model.Small banks can overcome the regulations they encounter with and evolve their business needs. Banks have spent 19.44 billion in financial technology market in the United States alone to prevent themselves from falling further behind. Small banks are seeking to evolve this business model and prevent future small bank closures due to large corporations taking over the financial industry .
Large banks take over the market due to customers wanting convenience and real time information due to large banks having a limitless budget and resources for their customers. Zikher can change by providing small banks the resources they need to make their loan,and mortgage application processes quicker. Small banks have to remind their customers of the benefits of banking with them by making their business model attractive to changing consumer needs.
These needs include preserving the personal business relationships between small banks and their customers. Large corporate banks use pools of customer service agents and don’t have a personal and localized business relationships with their clients. Clients prefer face to face relationships over call center relationships that do not address local needs. Locality is important to customers because small banks can closely use their personal knowledge and care more for their clients needs. Local credit unions and banks make sure that there are not unreasonable sales transactions and that they meet the customer’s needs . Larger banks only care about meeting their commission goals and the customers have less control of their partnerships with these institutions. Small businesses are supported by small banks and rely heavily upon the support of smaller financial institutions . Small banks and credit unions provide all the same services with less fees and promote productive financial transactions that drive the local economy. Large corporate banks don’t have as many resources for small businesses and it is more difficult to be approved for loans because they don’t have a vested interest in benefiting the local community. Local banks and credit unions are driven by local communities, promote economic growth and do not have a conflict of interest when discussing serious financial concerns with clients. Large banks are more regionally focused and focus more on investments.Corporate banks are not focused on local prosperity because they want a corporate focused profit.