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5 Ways Financial Institutions Can Win Over Small Businesses in 2025

By Sal Rehmetullah
January 3, 2025 | 5 min read

Small businesses are the backbone of the global economy, driving innovation, creating jobs, and building communities. But for many small business owners, navigating the financial world can be overwhelming. Financial institutions have a tremendous opportunity to step in and offer solutions tailored to these businesses’ unique needs.

The challenge? Earning the trust and loyalty of small business owners in a crowded market.

To stand out, financial institutions must focus on delivering exceptional service and simplifying the banking experience. 

I decided to put together five key strategies and how to actually do them to help financial institutions win more business from small businesses—and keep them coming back for more.

1. Create a Consumer-Like Experience 

Small business owners are also consumers, and they’ve grown used to seamless, intuitive digital experiences in their personal lives. From one-click shopping to instant payments, these interactions shape their expectations of financial services. Banks and financial institutions need to bring that same simplicity and personalization into their offerings for small businesses.

How can they do this? 

  • Streamline Interfaces: Modern tools like nCino make complex banking workflows easier by unifying loan applications, account management, and payment solutions in one user-friendly platform. For example, Santander Bank saw a 40% reduction in loan processing time after implementing nCino—making life easier for both their team and their customers.
  • Offer Omnichannel Support: Whether it’s through an app, live chat, or in-person meetings, small business owners should have options for how they engage with their financial institution. Platforms like Salesforce Financial Services Cloud help banks deliver consistent experiences across all channels, boosting satisfaction and loyalty.
  • Pre Fill Applications: Why is that we have to type in the same information in 20 different fields. Can we not just pre-fill the applications of our customers based on the information we know. Finding a solution set that can help enable the reduction of total amount of fields can drastically increase the completion rate of new customer applications

The Impact

It’s simple: small business owners want efficiency. According to Apiture, more than half of small businesses would switch providers for a better digital experience. If your platform feels outdated or cumbersome, you risk losing customers to competitors looking for a better digital experience.

2. Embrace the Power of AI

Artificial intelligence (AI) isn’t just a buzzword—it’s transforming how financial institutions serve small businesses. AI can help banks deliver personalized advice, speed up processes, and reduce costs. For small business owners, AI-driven solutions can make navigating their finances less stressful and more insightful.

How to Use AI Effectively

  • Smarter Lending: AI platforms like Upstart go beyond traditional credit scores by evaluating broader data sets like cash flow or online reviews. This approach enables faster loan approvals and smarter risk management.
  • Proactive Financial Insights: Kabbage by American Express uses AI to provide small businesses with real-time financial data, helping them anticipate cash flow challenges and avoid surprises.
  • Fraud Protection: Solutions like FICO Falcon Fraud Manager leverage machine learning to detect fraud in real time, giving small business owners peace of mind.

The Results

Gartner predicts that by 2024, AI-driven banking tools will handle 75 percent of all customer service interactions. Early adopters are already seeing revenue increase by more than 6 percent, allowing them to reinvest in better services for customers.

3. Design Onboarding for Specific Industries

A coffee shop and a tech startup have vastly different needs, but traditional onboarding processes often treat them the same. Tailoring the onboarding experience to specific industries can help small business owners feel understood and valued immediately.

Best Practices

  • Vertical-Specific Workflows: Retail businesses might prioritize tools that integrate with POS systems, while a healthcare provider might need extra focus on compliance. Platforms like Plaid can help financial institutions create onboarding experiences tailored to different industries.
  • Simplify Paperwork: Pre-filled forms and automation go a long way in reducing friction. PayPal, for example, adjusts its onboarding for merchants based on their industry, providing tailored integration for platforms like Shopify.
  • Personalized Steps: Tools like Onboard.io let financial institutions design industry-specific onboarding journeys, ensuring businesses get the right tools and guidance from day one.

Why It Matters

According to a study from Wyzowl, more than 60 percent of customers say that onboarding is an important consideration, post sale. Moreover, industry-specific onboarding reduces churn during the critical first 90 days by as much as 40 percent.

4. Leverage Data to Understand Small Businesses

Banks often have access to rich data about their small business customers—but are they using it effectively? Having the right data can make a huge difference in understanding and anticipating SMB needs.

How to Use Data Wisely

  • Create a 360-Degree Customer View: Tools like the Worth 360 Financial Report provide detailed insights into a business’s financial health, growth potential, and spending habits. These insights allow banks to deliver more relevant products and services.
  • Behavioral Analysis: By studying transaction patterns, banks can identify when a business might need a line of credit or when they’re at risk of a cash flow shortfall. HSBC uses behavioral data to offer support to SMBs proactively, strengthening relationships.
  • Stay Updated: Solutions like Enigma offer real-time data on SMBs, ensuring financial institutions can act on the most accurate information available.

What the Data Shows

According to Boston Consulting Group, banks using advanced SMB analytics have seen 15 percent higher loan approval rates and 20 percent better repayment outcomes. It’s clear that better data leads to better results—for both the bank and the customer.

5. Be Transparent Every Step of the Way

Transparency builds trust, and trust is the foundation of any strong business relationship. Yet, many SMBs feel financial institutions aren’t clear enough about fees, loan terms, or approval processes.

How to Build Trust

  • Simplify Pricing: Small business owners value predictable costs. Companies like Square are a great example, offering flat-rate payment processing with no hidden fees.
  • Provide Real-Time Updates: Platforms like Blend keep customers informed about the status of their loan applications or other transactions, reducing uncertainty and frustration.
  • Use Clear Language: Financial jargon can alienate customers. By simplifying terms and conditions, banks can make SMBs feel more confident in their decisions.

The Bottom Line

A survey by BAI found that more than half of SMBs would switch financial providers for greater transparency. If your processes feel opaque, you’re likely losing business to competitors who prioritize clarity.

Winning over small businesses isn’t just about offering products—it’s about understanding their challenges and solving them in a personalized, transparent, and easy way. Financial institutions can set themselves apart from the competition by delivering a consumer-like experience, leveraging AI, creating tailored onboarding, utilizing rich data, and fostering transparency.

The banks and fintechs that embrace these strategies aren’t just earning customers—they’re building partnerships. And as small businesses thrive, so do the financial institutions that support them.