With the specter of inflation, growth slowing, and uncertainty over trade policy, today’s macroeconomic outlook is volatile and unpredictable. Financial institutions (FIs)—be they banks or credit unions—must ensure business resilience, deepen customer and member relationships, and protect revenues. One of the most underexplored opportunities for FIs is greater engagement with the small and medium-sized business (SMB) market.
Small businesses are engines of growth, creators of jobs, builders of communities, and catalysts of innovation and technological advancement. According to the U.S Chamber of Commerce, SMBs generate almost 44% of the United States’ gross domestic product (GDP). Therefore, the FIs that support them directly contribute to the economic health of the communities in which they operate. Though it was estimated to have been worth $60 trillion in 2024 (and projected to hit $90 trillion by 2030), the SMB segment remains grossly underserved. Ensuring the health and resilience of SMBs is a powerful opportunity for FIs, especially when it comes to payments.
But SMBs are not just a critical market. They represent territory that incumbents risk forfeiting to fintechs and challengers if they cannot provide real-time, seamless payment experiences. In this article, we explore four key strategies we recommend FIs employ to ensure they continue to meet the needs of small businesses and stay ahead of the competition.
1—Enable end-to-end integrated digital experiences
At one time, the entity providing the Demand Deposit Account (DDA) was seen as holding primacy in the banking relationship. Today, the critical factor is who owns the holistic payment relationship. Non-financial institutions are recognizing the importance of this model—often beginning with payments-first offerings to galvanize the relationship, before building out other product lines.
With this in mind, it is vital that all payment assets offered by FIs today are modern, innovative, and integrated—and give SMBs access to a host of end-to-end digital experiences. With the proliferation of peer-to-peer (P2P) payments, credit cards, wires, and numerous other rails, SMBs are looking for ways to transact in a simple, real-time manner that brings all these experiences together.
Despite being the very kind of businesses that need efficient, real-time payments the most, 87% of SMBs use a combination of tools, from an array of providers—be it to pay and send invoices, or reconcile accounts. Many that do not leverage digital tools still lean heavily on paper checks, an antiquated, cumbersome processing method that hobbles operational efficiency. These practices are a drain on human resources and an entirely avoidable dent in the bottom line. Integrated payments and processing solutions—supplemented by electronic invoicing, cash flow forecasting, and other money management tools—unlock revenue potential for SMBs, and FIs are best-placed to provide these services.
2—Facilitate network expansion
Delivering a real-time service to expand the capabilities and reach of payments is equally vital for today’s SMBs.
From an FI’s perspective, this means ensuring payment infrastructures support seamless initiation, verification, and receipt of funds at every endpoint, with flexible application programming interface (APIs), robust security, and simple integration. Success is the ability to reach all participants in the ecosystem, including merchants, billers, and SMBs.
To achieve this, it may be necessary for some FIs to partner with fintechs or other payment networks and incorporate data aggregation and integration strategies. The risk of failing to do so is the loss of customers to competitors. Research has shown that the financial needs of many SMBs are not currently being met—with 65% sidestepping their bank to meet at least one need elsewhere.
3—Mine for data insights
Network expansion comes with another positive by-product: the generation of rich data.
The act of moving money involves collecting a wealth of information. It is vital that this information is captured, interpreted to understand end-users’ behavior, and leveraged appropriately and securely to design tailored offerings. Many FIs today, for example, are using customer data to better engage account holders and offer highly targeted experiences.
Understanding and deploying payments data is no simple feat. It necessitates a platform that enables cross-channel and touch-point data normalization. Only when payments data is normalized can the platform generate value, whether it be helping organizations manage liquidity, create new services, or expand their customer base.
4—Become a growth partner and adopt a future-ready vision
What the preceding strategies boil down to is the need for FIs to help elevate SMBs with innovative, real-time payment services. This is a mutually beneficial relationship, giving FIs the chance to tap into an under-leveraged sector and giving SMBs the means to streamline operations and continue supporting local communities.
Even better news for FIs is that while the switch to real-time payments may once have required the upending of banking infrastructure, there are now solutions that plug into existing systems and act as gateways to key networks.
To truly stand out in today’s hyper-competitive, multi-party payments landscape, FIs must go beyond the box-checking exercise of payments delivery and become partners in growth. Banks and credit unions come with a holistic vision to supercharge a business’s treasury, modernize cashflow forecasting, streamline payroll, and unite all data under a single umbrella. Only when this is achieved can SMBs weather today’s macroeconomic headwinds and pivot from surviving to thriving.
Payments mean more than money mobility
Banks and credit unions are operating in an increasingly interconnected, fast-moving, and competitive landscape, with heightened consumer expectations. But ensuring SMBs can make seamless payments—and get paid—anywhere, at any time, is not just about the economic opportunity—it is a means to make powerful connections with the SMBs that local communities rely upon. FIs that embrace this shift with robust payment solutions will tap into the tremendous opportunity to effectively service SMBs and help shape the next generation of digital finance.
Matt Wilcox is the Deputy Head, Financial Solutions and President of Digital Payments at Fiserv
Photo courtesy Getty Images for Unsplash+
