Two years ago, Synovus Financial Corp. began reaching out to its smaller commercial customers to make asset-based loans, and now it is going smaller still. What makes this possible is its use of new analytics for small businesses.

Through a partnership with a collateral management platform outsourcer, the $36 billion-asset Synovus of Columbus, Ga., has been advancing short-term lines of credit to small businesses. Some lines are as low as $50,000 - well under the $3 million to $5 million level that Synovus typically seeks on its other asset-based loans. This year it hopes to lower the floor to $25,000.

Synovus is managing this with the aid of deep-diving, risk-averting analytics used to monitor the quality of the accounts receivable that back the loans. Using a platform from FTrans Corp. of Atlanta, which collects the receivables, Synovus is "looking to put out about half a billion to a billion dollars of this kind of business over the next five years," says Synovus chief risk officer Mark Holladay.

The Synovus program demonstrates the potential for new profits and higher touch that strategic data analytics can bring to small-business banking. But consultants and commercial banking executives say that the analytics for data-driven predictive modeling or deposit pricing in the small-business segment - unlike retail - is far from advanced. "Much of it has been done on the consumer side for some time, like attrition analysis," says Frank Aloi, president of CEO of Ath Power Consulting in Boston. "But we haven't seen it as much in the small-business market."

The gap is partially explained by the fact that many banks track small businesses much like they do retail customers, using the same customer-relationship management and business-intelligence systems that measure savings and investment activity for consumers. That can produce misleading results, says Aloi. In contrast to homogenous consumer demographics, companies in the same field may have starkly different customers and growth plans. Small-business banking also "comprises a smaller number of customers, making it more difficult to generalize from the data," Aloi says.

Given the blind spots, banks have a "myopic" view of the business loan and deposit potential in their markets, says Les Dinkin, managing director at Novantas. So they may not properly target priority markets, align sales goals efficiently or value services accurately. One common fault: Banks often overprice deposits because they use consumer metrics where rate sensitivity is more weighted. "The fact is the behaviors of small-business customers are so different," he says.

Even commercial bankers that understand their customers well need industry and market benchmarks that can help point to where a business is along its growth curve, says Kenneth Martin, who leads analytics-based marketing and sales-force training as executive vice president and director of the business banking group at the $151 billion-asset Citizens Financial Group Inc. of Providence, R.I. "It's no different from a consumer who's in that stage where they need to buy a house or a new car. There is a cycle to it."

Synovus, besides its lending expansion, has incorporated the use of third-party trade and market data to gain insight into the performance and cash needs of its customers. For instance, it studies market reports from more than 700 industries by research company IBIS World to better determine loan opportunities. It plans on upgrading to new data-analysis tools from Moody's Risk Advisor and financial information specialist iLumen so it can benchmark its customers' account activity (including cash balances) to industry peers.

"You've got some forward-looking, predictive type behavior with regard to specific industries," says Kent Fleming, Synovus' director of credit management for commercial and industrial lending. "This will help us to identity those needs, and it will help identify borrowing needs as well."