Banking, SMB Finance

Finding the sweet spot between fulfilling SMB needs and growing bank deposits

  • Despite various challenges, small businesses are finding ways to keep moving forward.
  • This presents an opportunity for FIs to target the growing SMB sector, particularly amid expected Fed rate cuts and competition from non-banks with enticing APY offers.
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Finding the sweet spot between fulfilling SMB needs and growing bank deposits

Banks have benefited from high-interest rates in recent quarters. But higher interest rates also hike borrowing costs for SMBs, posing challenges for small businesses seeking capital to manage operations, expand, or hire more staff.

Despite these challenges, small businesses are finding ways to keep moving forward. While big firms have grappled with declining profitability and growth over the past year, SMBs have bucked the trend. SMBs have collectively achieved an average 25% increase in median revenue over the past 18 months, and SMBs anticipate a positive growth trajectory going forward.

A recent report by Q2 highlights the potential for FIs to increase profitability and grow deposits by strategically targeting the growing SMB sector, especially amid anticipated Fed rate cuts and ongoing deposit competition from non-bank entities vying for market share with enticing APY offers.


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