FIs: Win More SMB Business by Addressing 3 Trouble Spots

FIs: Win More SMB Business by Addressing 3 Trouble Spots

By Tim Finkenstaedt

6 Sep, 2022

Barlow Research and Q2 recently discussed the threats and opportunities in SMB banking today, and I want to share some of the key takeaways from the conversation between Adam Johnson, Barlow’s Digital Business Banking Program Director, and Dean Jenkins, Q2’s VP of Product Marketing.

Adam and Dean explored compelling research that hones in on the trouble spots for financial institutions (FIs) in attracting SMBs. They also laid out some ideas for FIs to consider in resolving them. The major point they drove home is this: When FIs deliver an optimal banking experience to a small business, a relationship develops that brings more revenue opportunities.

Three Areas of Difficulty for FIs to Tackle
Three problems are hindering SMB banking growth. In a nutshell, they are:

1. 64% of small businesses are challenged by their FI not having the capabilities they need*. The research shared by Dean shows that most financial institutions (FIs) continue to miss the mark when it comes to meeting the needs of SMBs.

2. The majority of SMBs believe that fintechs are out delivering FIs. In a time when SMBs expect FIs to provide more tailored solutions and experiences to meet their needs, Barlow found businesses believe fintechs offer a better solution than their FI.

3. Up to 66% of SMBs are challenged to varying degrees by the lack of seamlessness of their banking platforms*. Q2-sponsored research has found businesses now expect seamless experiences, from onboarding to lending and more. Any friction in the process can be a relationship killer.

Meeting SMB Digital Expectations is the Game Changer
SMBs are no different from so many consumers: they expect a great experience in the digital channel. They want fintech-like solutions, the ability to self-serve themselves, and no hassles when applying for a loan or other transactional or credit need online.

There are 32.5 million small businesses in the U.S. which account for 99.9% of all U.S. businesses, and so many of them aren’t being served the way they want their FI to serve them. Just imagine what the upside would be for an FI embracing some of the innovative changes Dean and Adam recommend – you can listen and watch the webinar recording to find out.

An example of a gamechanger: meeting lending origination expectations
Digital lending is near and dear to me, so I found Dean and Adam’s discussion about the lending application process interesting. What excites me is that Q2-sponsored research has discovered that 72% of SMBs prefer borrowing from an FI*.

Borrowing isn’t all they prefer. More than 60% of businesses would be more likely to bank with a local community or small regional bank if it offered comparable products, services, and online customer experiences of a larger bank*.

However, as I noted earlier, 64% of SMBs have said their FI doesn’t have the capabilities they need*. Larger banks have been faster at putting digital banking initiatives in place, but today, all banks – regardless of size – must prioritize around their digital banking channel.

The small-business segment is too large and too important for banks to ignore—failing to meet their expectations will result in smaller FIs missing opportunities.

As a case in point, an FI implementing a seamless, fast online application option – for lending or other service – places itself in a great position win and serve more customers. As Dean pointed out, 88% of SMBs consider having seamless experiences across an FI as very important, important, or required*.

Listen to the full discussion between Barlow and Q2 here.

Take Heart, Smaller and Mid-Sized FIs Can win in the SMB Market
If your FI is struggling to succeed with SMBs, take heart – there’s no challenge that can’t be met with innovative partners who understand and can meet SMBs’ growing financial needs. Q2 is one of those innovators.

Feel free to email me at to learn more about Q2’s commercial banking approach and solutions.

*Q2-sponsored market research: Aite-Novarica Group, Survey of 1,000+ U.S. small business financial decision makers, Q3 2021.



Tim Finkenstaedt

Written by Tim Finkenstaedt

Tim Finkenstaedt is senior product marketer focused on Lending Solutions at Q2. Tim has more than 20 years of experience working both at banks and fintech companies where he developed in-depth knowledge of both the challenges financial institutions face and the tremendous opportunities ahead as they digitize their lending operations and capabilities. He plays a key role in ensuring Q2’s Lending Solutions strategies align with market needs and allow financial institutions to better serve their clients and internal constituencies. Tim enjoys a wide variety of outdoor activities.