Banking Strategies for Small Businesses
Key Takeaway: Small business clients are looking for banks to offer business management tools alongside traditional banking services.
Current Developments: US Bancorp believes that this year’s rollout of various products could strengthen its presence in the expanding SME (small and medium-sized enterprise) market.
What to Anticipate: Following the introduction of payroll and bill payment products, there’s a possibility that features for accounts receivable may emerge next, according to announcements from the Minneapolis-based bank.
US Bancorp’s recent release of accounts payable tools is part of a broader initiative aimed at fostering more lasting relationships with small business clients. Many of these clients view banks as ideal partners for back-office solutions.
On September 4th, Minneapolis-based Superregional Bank announced salary and billing amounts, along with card-based spending solutions introduced earlier this spring. Chief Product Officer for Business Banking, Shruti Patel, mentioned that accounts receivable features would soon be available.
The SME sector, which includes over 33 million businesses, is a crucial area for banking deposits and development opportunities. US Bancorp currently serves more than 1.4 million small businesses. According to Patel, who joined the organization in September 2023, many entrepreneurs seek credit but also want to build closer relationships with their financial institutions to support their operations.
“We’re always listening to small businesses that seek an integrated experience from banks,” Patel remarked. “Our mission is to create a one-stop hub where small businesses can manage their finances effectively.”
Recent survey results from August 2024 indicate that entrepreneurs greatly favor financial service providers that can bundle business management tools with traditional offerings like checking accounts and merchant services. This insight led to the launch of spending management platforms earlier this year, and now includes payroll and bill payment capabilities.
US Bancorp, a company with a significant $686 billion in assets, operates as a holding company for US banks. Collaborations with San Francisco-based Fintech Gusto have resulted in the development of payroll processing, while Bill Pay for Business was created in partnership with Fiserv and Melio, a New York-based payments fintech.
“Partnering with innovative companies focused on enhancing customer experiences makes perfect sense,” Patel stated.
Entrepreneurs often wish to concentrate on expanding their businesses and, consequently, are looking for partners, especially banks, to assist with everyday management tasks.
“They go to their bank for a checking account,” Wilcox explained. “They rely on the bank for credit lines. They want more than just that; they want to leverage their financial institutions further.”
This demand underscores US Bancorp’s strategy to integrate Gusto’s payroll technology into its platform and offer BillPay services to small businesses, which not only alerts them to upcoming payments but also checks if funds are available.
While Patel hasn’t provided a specific timeline for development, she suggested that accounts receivable features seem to be a logical next step for US Bancorp.
Offering a combination of tools geared towards small and medium-sized enterprises creates what Wilcox describes as a dashboard, providing real-time insights into a business’s financial standing. “It’s incredibly valuable to share that data,” Wilcox noted. “Our research indicates that they waste too much time managing operations across various providers.”
Ultimately, US Bancorp aims to develop new products that cater to the SME community, with Patel expressing that a stronger connection with clients is a primary goal.
“To be a bit selfish, I want deeper relationships and more engagement with my clients,” she admitted. “The more you can encourage stickiness in these relationships across various products and services, the better it is for everyone involved.”
