“Innovation is the specific instrument of entrepreneurship, the act that endows resources with a new capacity to create wealth.”

The changing trends in the market circles clearly show that people are diverting considerable equity towards small banks. However, this may be a short lived practice as small banks offer a lower rate of return and once the economy bounces back to normal, this trend can very well change. It won’t be long before people start investing in high risk ventures once again. Nevertheless, small banks can make use of the present opportunity to make foray into unchartered territories.

Small banks lend mainly for real estate purposes and the likes. However, the current scenario presents a terrific scenario for small banks to use the current attention they are getting to tap into some other, niche lending platforms. As on 1999, centuries old influence of small banks was going down rapidly, but the recent crisis has resurrected the need of small banks and this attention needs to be tapped before it runs out its course.

Identifying a niche is a long and tedious process. It requires incisive thinking and prompt action at each step. Firstly, banks need to invest time in analysing a new niche for themselves. This can be a suburb area which has little or no banking option. After that, banks need to focus on making products according to the needs of the people. Some places may require a bank for long hours or some places would like to prefer banks which are located at strategic location in town. These things need to be kept in mind before going in with the final decision.

After the niche market and product has been identified, small banks should market themselves properly and try to establish a strong relation with the people. Large corporate houses have an inherit disadvantage i.e. it becomes hard for them to look after each and every customer individually since the volume of trade is very high. However, small banks can offer such services easily. This can help them build better rapport and fulfil the needs of people. The current business environment provides an excellent platform for banks for launching such an exercise.

Robin Trehan is a M&A expert.Robin Trehan can be reached at www.keyfunds.com This email address is being protected from spambots. You need JavaScript enabled to view it.