Community and Regional banks face a multitude of issues with respect to their business, several of which Crux is addressing with their fintech product.
Overview of the Problems the Client Was Experiencing
Developing a Deeper Understanding of the Problem(s) Facing Bank
Crux team is skilled in data analytics and software development, but needed deep commercial banking subject matter expertise to better understand how banks monetize business banking relationships.
Developing a Product Designed to Address Key Issues Banks Are Struggling With
Banks struggle with the lack of visibility into important parameters of a small or midsize, privately held businesses. The product being developed needed to address these issues on behalf of banks. These include gross revenue range of the business and approximate asset metrics, both of which are important in the evaluation of credit worthiness and collateral available to secure a credit facility.
Procuring and Developing Talent with Expertise in Small and Middle-Market Banking (C&I)
Especially as a community or small regional bank is working to shift from a CRE focus to a C&I focus. Community and Regional Banks and Credit Unions generally attempt to segment commercial clients based on gross revenue size. Often the segmentation is defined as one of three major categories including Business Banking, Middle Market Banking and Specialty Finance, which is specific to a certain industries like technology, healthcare or even specific types of lending like equipment finance.
Overview of the Solutions to the Problems
Developed a Product That Helps Banks Identify the Right Time to Call On a Prospect
Using various data sources, Crux developed insights for Bankers to better understand the right time to call on a prospect. For example, using lien data and the date a lien was filed insights can be generated that suggest calling on a prospect 3-6 months in advance of a loan maturity.
Developed a Product That Improves Portfolio Management Capabilities
Often, business banking relationships have complex legal and ownership structures that include multiple beneficial owners and multiple legal entities designed to reduce liability and protect assets. These complex ownership and legal structures create risk for Bankers as the company's assets generally secure loan facilities. Crux has developed a product that allows a Banker to see changes in legal and ownership structure, which helps manage portfolios more effectively with reduced risk of loss.
Developed a Product The Provides the Ability To “Cross-Sell” the Relationship Into Other Areas of the Bank
Examples include Treasury Management, Foreign Exchange Services, Business Card Spend Management and Merchant Services (in addition to cross-selling consumer-oriented products and services like mortgage and consumer loans). Cross-selling also generates new revenue for the bank, which enhances ROA and ROE. Cross-selling also benefits the bank because relationships tend to be “sticky” and churn is very low.
Developed a Product That Enhances The Banks Ability to Source Inexpensive Commercial Deposits
The cheapest form of funding for a bank comes from various segments within the small and middle-market spectrum. Generally, a bank is not paying interest on these accounts, but rather compensating the client by “waiving” fees associated with other services, which include commercial digital banking or volume-based fees associated with money movement. This practice is known as Account Analysis.
Results of the Solutions Proposed and Executed
Executed Contracts With The Company's First Three Clients
Through significant product development work and targeted business development, Crux was able to land the company's first three client banks.
Developed A Significant Pipeline of Prospects
Through the efforts outlined above, Crux has a significant pipeline of 8-10 new banks that are likely to sign within the next 6-12 months.
Developed Documentation To Assist Bank Implementation Efforts
Developed extensive marketing and technical documentation the client can provide to the bank to assist with complex implementations.
Read more about the Crux-Finov8r partnership in this press release from 2024.