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Giant bank wants to cozy up to small businesses

By JEFF HARRINGTON, Times Staff Writer
© St. Petersburg Times
published August 18, 2002

Dana Drago has to have one of the toughest assignments in the corporate banking world.

As head of small business banking for financial titan Bank of America, it's her job to convince entrepreneurs that the biggest bank on the block cares about them. That's no small task considering all the frustrations that entrepreneurs experience going up against bureaucracy and big business. And it's doubly difficult because small business historically has been the turf of community banks.

"Most small business owners think that big banks don't "get it,' so we are trying to get through in all of our ads that we get it," Drago said.

That's why, Drago said, her bank has shunned traditional happy-talk ads for small business banking that show a smiling florist or a beaming bike shop owner. Bank of America's new ads stress the pressures of the job. One carries the tagline: "Admitting you're a small-business owner is the first step to getting help," with Bank of America offered as the solution.

"We're saying that there's nothing for them to be ashamed of; that's what an entrepreneur is," Drago said.

In addition to the campaign, Drago is adding small-business specialists at branches and experimenting with new products. Beginning next month, small businesses that entrust Bank of America with large enough deposits will get to choose from a menu of discounted services such as accounting help and credit cards.

The idea came out of research with small business owners who objected to bundled packages that forced them to pay for services they would never use. "They said, "Give me the discounts. Give me the perks because I don't get perks from a lot of people,' " Drago said.

After a year on the job, Drago can point to some successes. The bank, already the biggest lender of Small Business Association loans in most of the places it does business, has doubled its volume of SBA loans this year.

Based in Charlotte, N.C., Drago has ready access to bank chief executive Ken Lewis and exercised it a week ago to tell him she's exceeding targets for expanding small business banking.

It helps that the bank, just by virtue of its size, already has some sort of business relationship with one out of five small businesses in Florida.

Drago talked with the St. Petersburg Times last week during a visit to Tampa to brief employees about the latest initiatives. Here are excerpts from that interview:

Question: After NationsBank and BankAmerica merged (into Bank of America), how did small business banking become a priority?

Drago: As the bank looked at our (two) customer groups collectively, there was a huge "aha!' in terms of how big the small business opportunity is. We had 2-million small business customers that collectively generate almost $1-billion in net income for our company. Last year, our operating net income was somewhere around $7.4-billion.

Q: So what are your goals in terms of building small business revenues one year out? Five years out?

A: I knew you'd ask me that. Let's just say that there's a lot of work underway to capitalize on the opportunity. . . . We think there's opportunity to double this business over the next five years. There is untapped potential.

Q: Community banks have an edge in appealing to the entrepreneurial nature of small businesses. How do you counter that?

A: Typically, what we hear is a small business owner that says, "Well, I want a local banker." Our client manager says "Well, I'm about as local as you can get. I've been here all my life. I just happen to be able to bring you the resources that a big bank has to offer."

Many community banks focus on certain niches. We cover everything. When a small business grows, we have more services that they can get through a large institution like Bank of America: cash management, our online banking.

Today, 250,000 customers actively use online banking, and that's growing every day. You've got about 40 different countries that we have services in. We've got a tremendous amount of expertise in many different industries. If you're a group of doctors, for instance, we're experts in the health care industry. We can bring in people that will provide value and advice.

Q: What are your latest initiatives?

A: We've done a lot of improving online banking for small business owners with our Web site, making it more accessible and faster.

We are rolling out what we call our small business advantage product at the end of the this month, which is taking services and bringing them together. If a customer keeps a high deposit balance with us, they get a package of services at a discount that they can select from. But just as important, they're noted as a special small business customer and receive priority service.

Q: What is the threshold balance to qualify?

A: I think we want to delay (revealing) that.

Q: How many client managers do you have specializing in aiding small businesses?

A: We've got about 200 in Florida. Nationally, we have 1,000 associates. As we go into 2003, '04 and '05, we're planning to add more client managers as we grow this business.

Q: How have your goals changed, particularly in building relationships with customers?

A: Traditionally, there was a focus on loans, and now we are focusing on the total relationship. The two areas where there has been a lot of activity this year are cash management and deposit accounts.

What we've found, particularly in cash management, is that small-business owners really need advice. Unlike large companies, they don't have inhouse experts. Eighty percent of small business owners turn to outside consultants. It's amazing what we can save them . . . We're talking about bookkeeping, credit advice . . . advice in terms of retirement services and retirement planning. We do offer some insurance products. . . . We don't offer tax advice. That's for them to work with their accountants.

Q: In your customer research, what feedback did you receive on what the bank did best and what it did worst?

A: Number one (in what the bank did best) was we're the most convenient. Second was that we do have a wide array of products and services.

The area that we need to do a much better job in is knowing our clients and having our client managers being proactive. It's really that the knowledge and the service we provide is inconsistent. . . . A customer says, "When I got Suzie (in customer service) she was phenomenal, but when I (later) called on the phone, I got someone else."

Everybody has goals that show where we want to go in customer service.

Q: Can you explain the approach you're taking in the new ad campaign?

A: Talking to small business owners, they all look different. They sound different. But they have this common thread of hard work and that you really have to be committed. That's what you see coming through. We get it. We know it's hard work, but we also know you are a unique individual who believes in that dream. So many of them are on the edge when they finally break through. You wonder if they will make it, and they do.

Q: In this economy, are you finding fewer startups seeking loans?

A: There's not a lot of startups. We're able to offer more customers in this economy who do not qualify for a bank loan an SBA loan. SBA loans are used much more for working capital than for startup.

Q: How is the economy affecting the availability of loans? Is there any credit crunch?

A: We have lots of money to lend. We really do. We've seen the economy begin to turn around. . . . What's happened in the last few months, nobody can explain that. But the assumptions that we had in terms of how our small business owners would bear up under the past year have not happened, so our losses are a lot lower than expected. So we're really happy for our small business customers and for ourselves.

-- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.

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