|
|
Missed the webinar? |
In short
- The small business market is expanding — nearly 97 million businesses in the US, most earning under $1M and underserved by traditional banking.
- Fintech partnerships are the fastest path to modernization; building from scratch takes longer than the competitive window allows.
- The future of small business banking is embedded inside business checking — not bolted on, not separate.
- The banks that win the segment are the ones treating it as a growth business with an owner and a plan, not a product line that happens to exist.
How big is the small business market for banks today?
There are nearly 97 million small and independent businesses operating in the United States today. More than 90 percent earn less than one million dollars in annual revenue. Most are sole proprietors or microbusinesses. They are service providers, contractors, online sellers, and creative professionals.
Despite their size, these customers represent the largest growth opportunity in the industry. However, many community financial institutions still rely on retail or commercial models that do not fit their needs.
Small businesses fall into the gap: too small for treasury, too complex for consumer. As a result, they turn to third parties to fill the void. According to Datos Insights, 65 percent of small businesses now use a fintech app because their bank does not provide the digital functionality they need. Those third parties now own the daily relationship that used to belong to the financial institution.
This is both the challenge and the opportunity. To reclaim relevance, banks must design products that meet everyday business needs inside their digital channels.
Why are fintech partnerships the fastest path to banking modernization?
The commercial and payments landscape is changing quickly. Datos Insights reports that more than 70 percent of small businesses already work with or plan to work with a fintech for cash management or payments. Disintermediation is accelerating and so is the need for speed.
Banks cannot afford multi-year development cycles. The new reality calls for agile partnerships that help institutions modernize faster than traditional procurement models allow.
Datos recommends a three-part growth strategy for banks and credit unions that want to compete:
- Expand: Acquire new small business customers and broaden product offerings.
- Retain: Deepen relationships by embedding more functionality into core accounts.
- Optimize: Improve pricing and drive non-interest income through value-based solutions.
Forward-thinking institutions are already moving in this direction. Rather than building everything in-house, they are forming fintech partnerships that allow them to deliver meaningful innovation at scale without sacrificing compliance or brand control.
Why is the future of small business banking embedded in business checking?
For decades, business checking has been treated as a commodity. That is changing.
Autobooks and its bank partners are proving that when you embed invoicing, payment acceptance, accounting, and access to working capital directly into checking, it becomes something entirely new. It becomes a platform small businesses can actually run their business from.
This evolution creates a daily connection between business owners and their financial institution. Instead of logging into a fintech app, they log into their bank. Instead of moving deposits away, they keep them close.
Banks offering these integrated smart checking experiences are seeing higher balances, deeper engagement, and stronger primacy.
As one banker shared during the webinar:
"Autobooks turned our business checking account from passive to active. We are seeing customers who log in more often, stay longer, and use more products."
Smart checking is no longer just a feature upgrade. It is a strategic shift. It is how banks keep pace with the market, defend deposits, and rebuild business relationships that were once lost to fintech competitors.
How should banks act on these small business banking insights?
The small business banking landscape is undergoing a fundamental reset. The winners will be those who:
- Recognize the growing opportunity in micro and small business segments
- Accelerate modernization through fintech partnerships
- Transform checking accounts into platforms for daily business management
Banks that act now can redefine their role, not as product providers, but as partners in small business success.
Frequently asked questions
How many small businesses are there in the US?
Nearly 97 million small and independent businesses. More than 90 percent earn less than $1 million in annual revenue, and most are sole proprietors or microbusinesses — service providers, contractors, online sellers, and creative professionals.
Why are fintech partnerships the fastest modernization path?
Because the capability gap between what small business customers expect and what most banks offer is wide, and building in-house closes that gap slower than non-bank platforms are pulling customers away. A partnership lets an FI deploy a proven stack inside its own digital banking experience without multi-year build timelines.
What does "embedded into business checking" mean?
Invoicing, payment acceptance, cash flow visibility, and related operating tools live inside the business checking account itself — not in a separate app, portal, or bolt-on product. The account becomes the operating hub, which is how non-bank challengers designed theirs from day one.
Can a community bank execute this, or is it only for larger institutions?
Community banks and credit unions are often better positioned than larger institutions because they already have the trusted relationships and the regulatory standing. What they need is the operating layer, which partnerships supply.
What's the first action item from the webinar?
Pick a segment where the opportunity is visible, identify the capability gap between what they need and what the bank currently offers, and decide whether the gap is closed faster by building or by partnering. In almost every case, the answer is partnering.