From Gig to Growth: Rethinking How Banks Serve Small Businesses

Small businesses, which account for 99.9% of businesses in the U.S., continue to face cash flow pressures, talent attrition and operational and regulatory challenges. Banks have a massive opportunity to better serve this critical segment by providing the resources, tools and guidance needed to help them grow their business with greater confidence and ease.

However, many banks struggle to capture and retain this segment. While small business is a broad term, these organizations differ widely in size and scope — from those with hundreds of employees in high growth mode to solopreneurs working a side hustle. A one-size-fits-all offering, which is often the norm at many institutions, cannot effectively support such a wide spectrum of complexity and needs. There also tends to be a lack of resources or strategic guidance provided to these customers, resulting in loyalty that’s lukewarm at best.

Banks must prioritize flexibility in their offerings and step up to serve as a trusted adviser if they hope to compete for and win small business customers.

The Need to Serve All Sizes
It’s estimated that 50% of the U.S. workforce with a full-time job is either currently working or will work for a gig business by the end of 2025. These customers are largely going outside of traditional financial institutions for their banking needs. Some turn to third parties such as PayPal, Venmo or QuickBooks. Others seek niche solutions focused on their specific needs — offering flexibility, free checking or high-yield savings and integrations with popular business apps. If they are not using a fintech or third party, gig workers typically leverage emails and spreadsheets for accounting, invoices and cash flow forecasting. This system is inefficient and prone to errors.

Banks that want to attract and engage this segment must be more flexible and tailored in their approach. After all, many gig workers today are hiding out in their retail banking account, simply making do. Consider the power of offering a bundle, allowing gig workers to choose the functionality most important to them, from digital invoicing, payments optionality and innovations, cash flow reporting and management, payroll support and more.

Banks should also proactively discuss additional needs with this group, such as a business debit or credit card, microlending for larger purchases or even business insurance. Establishing these relationships at an early stage increases the likelihood that gig workers will continue to choose the bank as their preferred financial partner as they grow. After all, small businesses become big businesses.

On the other end of the spectrum sit larger small businesses becoming more complex in their financial needs. While they might not require a full treasury management offering, they need more functionality than what’s included in a traditional small business suite. Here again, flexibility is key. There should be an in-between bundle or option, allowing customers to access capabilities such as Enterprise Resource Planning (ERPs), embedded payments, international wires and other complicated use cases that can help growing businesses as their needs become increasingly sophisticated.

Of course, serving this wide array of needs is easier said than done. There is a critical data element here. To effectively support these businesses, banks must first be able to identify those that are hiding out in retail accounts or are growing increasingly complex, then make the right solutions available. The banks that leverage flexible and extensible platforms — allowing for easy integration into third parties as well as to their own proprietary experiences — will be best positioned to succeed.

How to Create Meaningful Engagement
While offering the banking solutions that businesses need to efficiently address pain points is critical, the banks that truly build lasting loyalty with these business segments will be those that take the extra step, not only as a banking provider but also as a trusted adviser. For example, imagine the impact of advising the gig worker or small business owner on topics such as growth, financing or investment strategies. These extras can solidify the bank as a go-to source for that business even as it grows.

Small businesses represent not just a potentially profitable customer base but the backbone of local economies and communities. But their diverse and evolving needs require a more nuanced approach from banks. Those that go beyond the basics, offering flexible, scalable solutions paired with meaningful guidance and engagement, will stand out. By investing in the right technology, strategically leveraging data and embracing the role of a trusted adviser, banks can build deeper relationships, support business growth at every stage and unlock long-term loyalty and revenue in return.