Digital Banking for a New Generation of SMB Owners

Digital Banking for a New Generation of SMB Owners

By Jaime Dominguez

19 Oct, 2022

There’s nothing small about small to midsized businesses. In fact, SMBs account for more than 90% of U.S. businesses. SMBs can be anything from the corner bakery, to a quaint, small-town bed and breakfast, to the next big tech idea.

They’re diverse and complex, and their owners are quite like individual consumers in that they want what they want, when they want it. They’re extremely tech-savvy and tech-demanding, expecting sophisticated, smooth, personalized, and speedy digital experiences, plus self-serve options—just like they get with the smartphone in their pocket.

Given the pace of change and the ever-evolving needs and demands of SMBs, some community financial institutions are finding it more difficult than ever to attract, serve, retain, and grow their business.

Fintechs to the Digital Rescue
In the past few years, fintech disruptors have come to the digital rescue—demonstrating an understanding of small business needs and challenges and quickly developing solutions—ranging from lending to bookkeeping to payroll processing to invoicing. Just like they did with retail banking, fintechs started sprouting up left and right, focusing on building the best possible digital products to solve individual SMB problems. Consequently, they’ve wound up winning considerable mind and market share.

Redefining and Reclaiming SMB Relationships
What if, instead of viewing fintechs as a competitive threat, swooping in with niche solutions and taking market share, FIs consider them collaborators. Rather than trying to specialize in—and effectively digitize—every aspect of an SMB’s financial needs, they could “outsource” these solutions by bringing in premium digital experiences offered by leading fintechs.

The effect is FIs once again become the place SMBs turn for all of their financial needs, without having to build or manage everything themselves. Offering SMBs a “fintech ecosystem” of banking adjacent products that are natural fits in a digital banking platform is game changing—for both FIs and the SMBs they serve.

It’s a pretty picture, but most FIs would be challenged to operationalize this model today. It can take months just to vet and partner with a new fintech, let alone test and implement its product. And that’s to say nothing of making the experience cohesive with the rest of the digital banking channels. Most tech vendors in the banking space have built their business on making integrations like this difficult and costly.

But it doesn’t have to be. The future of banking innovation lies in technology and a partnership model. With it, taking care of small business owners is as simple as offering a marketplace from which SMB owners can pick and choose applications that meet their operational needs. This allows FIs to expand their SMB relationships with sticky solutions, while also having the opportunity to grow non-interest income.

What's Next?

FI leaders need to start thinking differently about how to serve SMB customers. The old mentality of having to customize offerings and build everything from scratch is no longer necessary or even viable.


Above all, FI leaders need to keep an open mind. They genuinely care about their communities and can be a tremendous resource for them. This is the key differentiator for community banks and credit unions.

Learn more about the challenges of today’s SMBs and how financial institutions can meet—and even exceed—their needs in our hot-off-the-press eBook, “Digital Banking for a New Generation of SMB Owners.” And don’t miss our upcoming webinar, “Harness Fintech Partners to Win SMB Market Share in 2023 and Beyond,” featuring panelists Shon Cass, EVP and Founder of Texas Security Bank; Ryan Johnson, CCO of Monit; and Derik Sutton, CMO of Autobooks.

Jaime Dominguez

Written by Jaime Dominguez

Jaime is a senior product marketer at Q2 with more than 15 years of experience in banking, working across various aspects, such as consulting and strategy. His forte is understanding market drivers, strategic directives, and business needs to define go-to-market initiatives across digital platforms while helping financial institutions achieve their business goals and objectives. Jaime's an amateur photographer and foodie, and loves to travel with his family.