Banking Exchange Magazine Logo

Woo small businesses with tailored products

Commercial platforms make serving small businesses profitable

Woo small businesses with tailored products

Commercial platforms make serving small businesses profitable


Financial institutions now have the opportunity to retain and win back lost small-business customers through more tailored products and services, according to research from Aite Group.

Examples include electronic invoicing, more robust payables capabilities with tighter integration to their accounting systems, cash-flow forecasting, and document storage.

Aite Group’s report shows that many financial institutions have believed small businesses are expensive to serve, preventing them from investing heavily in small-business customers. This has also led to the current environment in which most small businesses are served through banks' consumer platforms and, for sophisticated capabilities, by nonbank providers.

The profile of small-business customers has evolved in recent years, however, to one of greater technological savvy and product sophistication. Further, their needs more closely mirror those of commercial customers than consumers, creating revenue opportunities for banks and making them more attractive customers than ever before.

Small businesses value the security their banks provide and prefer a one-stop shop to handle their financial needs. However, for financial institutions to gain small-business customers, they must switch from a primarily branch-focused strategy to one that instead highlights online and mobile capabilities. Further, they must create more effective product bundles with pointed, clearly communicated value propositions to shift from a model of giving products away to one that charges for them.

"Banks are leaving money on the table by serving small businesses from consumer platforms," says Christine Barry, research director in Wholesale Banking & Payments at Aite Group.

"With the right value proposition and messaging, small businesses will pay for products, so banks shouldn't feel products need to be given away. Banks need to better leverage technology—and partner with the providers of it—to understand industry best practices and more cost effectively serve small-business customers."

Aite Group’s research is based on a September 2013 online survey of 1,003 U.S.-based businesses generating less than $20 million in annual revenue. While this revenue range goes beyond the small-business definition used by many institutions, it represents a largely underserved segment and thus untapped revenue potential.

John Ginovsky

John Ginovsky is a contributing editor of Banking Exchange and editor of the publication’s Tech Exchange e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each Tech Exchange issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and for ABA Banking Journal and was managing editor and staff reporter for ABA’s Bankers News. Email him at [email protected]

back to top


About Us

Connect With Us


Webinar: From KYC to IDV

How three leading banks are utilizing cutting-edge
digital tools to onboard, win, and wow customers

Time/Date: June 23, 2021 11:00 a.m. ET

Digital adoption, already moving at warp speed, accelerated seven years into the future during the COVID-19 pandemic. As the number of bank branches continues to fall, with at least one study predicting all branches will disappear by 2034 (Fox Business) and foot traffic declining (Vox), today’s most innovative banks are charting a new, digital-first path to win over customers while increasing security, meeting KYC compliance requirements, and winning customers to drive revenue.

In this webinar, you’ll hear from John Baird, Founder & CEO of Vouched, Tyler Crawford, COO of Bankers Healthcare Group, Anand Sathiyamurthy, CPO of Flagstar Bank and Daniel Sheehan, Chairman & CEO of Professional Bank as they describe their vision for digital transformation and how customer expectations are changing to digital first. They’ll also explore how fostering an innovation mindset creates new ways to tackle complex KYC problems and allows them to quickly compete in new markets and win customers.


This webinar is brought to you by:
Vouched Logo