FIs: Take a Closer Look at Micro and Small Business Opportunities

FIs: Take a Closer Look at Micro and Small Business Opportunities

By Debbie Smart

9 Sep, 2022

Micro and small businesses, just like larger ones, expect financial institutions (FIs) to meet their distinct needs, but despite expectations, many FIs continue to offer a one-size-fits-all approach. Failing to meet the unique needs of this large, underserved market could be a blunder a bank or credit union can’t make. A major reason why: Failing to meet the unique banking needs of these businesses today creates a higher probability that as they grow, the chances for long-term relationships are lost.

What Micro and Small Businesses Want
Right now, most small businesses want digital banking experiences tailored to their needs—the kind that provide flexibility, deliver ease of use, and seamless integration to the products and services they require to run their organizations more effectively. Not only do these businesses want great transactional banking, but they want all interactions to be great—be it account opening, adding new products and services, lending, or integration with other financial solutions.

The FIs making major inroads with micro and small businesses are those providing the experiences and capabilities that are aligned with their digital needs and the personas of these businesses. Doing so, they’re enjoying deposit growth, more fee revenue, and greater cross-selling.

Shouldn’t Your FI Be Winning Smaller Business Clients?
Aite-Novarica’s small business survey in 2021 found 62 percent of small businesses would consider banking with community or smaller regional banks if they offered products, services, and comparable or superior customer experience as a larger bank. Whether a community bank or credit union, the odds are in your favor to win micro and small businesses if these products and services are available, and exceptional service is built into your digital banking channel.

Not only having the ability to understand and engage with businesses, but to serve them through tailored services will produce more revenue. Your FI also will be in a better position to compete with larger FIs as well as fintechs attempting to take market share from traditional financial services.

Barlow Research found in 2021 that more businesses are open to using a bank’s digital tools and services than in 2000 – positive news emerging from the dark days of the pandemic. This isn’t a unique development, though. Even before the pandemic, digital transformation has been top of mind among businesses with 89 percent of all companies adopting digital-first strategy or planning to do so. Without a doubt, their strategic focus includes digital-first business banking.

Along with the fact that the small business sector is large and underserved, clear opportunities exist, particularly in the digital channel. One area of opportunity is credit. Less than half of small businesses report that their credit needs are met. At the same time, small business lending satisfaction is highest with small banks.

Imagine if your FI could offer digital lending that reduces cost while speeding decision making. Deposit growth would follow in the communities served, and your FI would be in a position to gain business clients in other locations without making higher-cost branch investments.

Join Us to Learn More About Micro and Small Business Banking Opportunities
This September and October, I, along with several of my colleagues, will be discussing the many opportunities that await FIs prepared to meet the needs of micro and small businesses. Join us at the upcoming events listed below, where Q2 will be exhibiting and we'll be presenting sessions focused on how FIs can reduce attrition, win new business account holders, and develop and strengthen relationships with more attuned digital business banking.

September 15–16: WesPay Payments Symposium – Session is Thursday, September 15, 11:40 a.m. PDT, presented by Debbie Smart

September 20–21: UMACHA’s Navigating Payments – Session is Wednesday, September 21, 12:30 p.m. CDT, presented by Tim Finkenstaedt

September 28–29: PaymentsFirst Solutions Payments Conference – Session is Wednesday, September 28, presented by Debbie Smart

October 3–5: EPCOR Payments Conference – Session is Tuesday, October 4, 9:15 a.m.  CDT, presented by Jaime Dominguez

October 11–13: Macha 2022 Electronic Payments Conference – Session is Wednesday, October 12, 2:15 p.m. CDT, presented by Jaime Dominguez


Debbie Smart

Written by Debbie Smart

As a senior product marketer at Q2, Debbie Smart serves as the voice of the modern banking customer and the evolving financial services industry. With more than 40 years of banking and cash management experience, Debbie works to deeply understand Q2’s existing and desired customers, leveraging market research and competitive intelligence to forge new partnerships and influence product capabilities across Q2’s business product suite. In her free time, Debbie is an avid scuba diver and traveler. When she’s not out on an adventure, you can find her curled up with a good book at home.