How embedded payroll can help banks build stronger SMB relationships

Businesses are flooded with new choices of financial providers that could challenge traditional banks’ customer loyalty.

To maintain their position, banks should reevaluate their strategies and look for opportunities to integrate value-added services into their core offerings. Banks can collaborate with vendors and partners to broaden their product range and stay competitive.

Banks can take the first step by leveraging the trust they’ve built with customers to gain a competitive edge.

In the world of money, trust is the golden rule

Banks hold a strong position in the trust game with SMB customers thanks to their legacy, regulatory reliability, and long-standing reputations. 

Source: Gusto Embedded x American Banker

This sentiment is echoed by 97% of bankers who regard trust as a critical or very important factor for customer retention in their industry, according to research by Gusto Embedded and American Banker.

But relying on that legacy and reliability as the sole foundation for trust is insufficient to hold ground against emerging challengers.

“In addition to trust, banks need to offer additional value-added services like payroll to stay ahead of challenger banks,” said Yi Liu, General Manager of Gusto Embedded. “These businesses already trust their banks, so offering complementary services that allow them to manage all their financial needs in one place can deepen those relationships.”

SMBs expect an all-in-one solution to simplify their operations and reduce costs, so they can focus on growing their business.

According to a U.S. Bank survey, 56% of SMBs prefer a consolidated financial management platform with a comprehensive suite of banking, payments, and software solutions, and they expect their banks to provide them.

Source: Gusto Embedded x American Banker

Meanwhile, banks are struggling to meet rising customer expectations and growing competition from non-bank financial institutions, with only 11% of bankers rating their banks as excellent in this regard.

This gap has prompted SMBs to explore alternatives to traditional banking. According to Gusto Embedded’s research, 70% of SMBs depend on multiple providers to fulfill their financial service needs, despite maintaining a primary bank for core functions.

Enhancing technology and unifying data can help banks break this cycle.

Banks’ rebound strategy

There is ample room for financial institutions to ramp up investment in technology, particularly in providing advanced tools for SMB owners.

Here’s how:

i) Put embedded finance at the forefront

With embedded finance solutions, banks can open doors to better serve small businesses by incorporating services like payroll processing, lending, and payment systems.

Small businesses almost universally use business checking (91%) and credit/debit cards (88%), typically through their main bank, according to Gusto Embedded’s research. Payroll services come next, with 66% of businesses using them. However, 37% of SMBs utilize external providers for payroll, while only 29% rely on their primary bank.

Source: Gusto Embedded x American Banker

Banks have long held preferred provider status with SMBs. By offering embedded value-added services banks can weather industry change, gain a competitive edge, and improve customer retention, cementing their role in the evolving financial ecosystem.

“By embedding services like payroll alongside bank balance information, banks can predict a cashflow shortage and offer a loan to cover an upcoming payroll,” noted Liu. “This is a win for business owners as well, in addition to the overall time savings of having everything in one place, in one account.”

ii) Integrate superior services with minimal effort

Source: Gusto Embedded x American Banker

76% of SMBs emphasize ease of use as a key factor in getting products and value-added services from their banks, according to Gusto Embedded’s research.

This is a major consideration for SMBs because these businesses have limited resources and smaller teams. They need tools that are simple to integrate and compatible with their existing systems so they can avoid the complexities of managing multiple systems. 

“Our customers are telling us that they’re short on time and long on problems. We do not want them to have to log into 22 different applications to run their business,” said Mark Valentino, Head of Business Banking at Citizens, during  Tearsheet’s The Big Bank Theory Conference in 2024.

Additionally, SMBs typically operate in fast-paced environments, so user-friendly solutions can help them focus on their core business activities without being bogged down by complex technology or the need for extensive technical expertise.

Capturing young SMB owners’ attention with embedded VAS

Investing in tech upgrades can also help banks attract the growing group of tech-savvy young entrepreneurs, who are very receptive to convenient, digital, and embedded solutions.

Research indicates that the majority of Gen Z are eager to start their businesses ‘to be their own boss’, rejecting the traditional 9-to-5 grind. This entrepreneurial mindset is reflected in the fact that 80% of Gen Z business owners launched businesses online or incorporated mobile components, while 46% opted to start with a physical storefront. 

As a new wave of young entrepreneurs enters the market, financial institutions have a chance to connect with this emerging SMB customer base by supporting their business goals through embedded VAS.

“In our experience selling payroll to small businesses, driving ease of use is critical for reaching new customers,” said Liu.

The impact of a sharp differentiation strategy

In addition to the key strategies for engaging with the SMB sector, banks can take a more proactive approach by zeroing in on solving specific SMB pain points.

Handling payroll, for instance, can be fraught with complex components. Some SMBs employ full-time workers while others rely on contractors. In fact, most small businesses have between one and five paid employees, with smaller firms typically relying more on contractors, according to Gusto Embedded’s research.

Given the various types of employees within SMBs, business owners face significant hurdles in managing payroll. Paying contractors requires different workflows and systems than paying full-time employees, adding extra complexity to payroll processes.

To create a holistic solution that tackles all aspects of a specific challenge, such as payroll, FIs can collaborate with embedded payroll providers like Gusto Embedded.

In 2023, Chase Payment Solutions tapped Gusto to offer payroll services to its business customers. By partnering with Gusto Embedded, Chase Payment Solutions customers can manage payments, banking, and payroll with a single Chase.com login. This integration streamlines payroll, tax calculations, filings, and employee paystub creation.

“When we talk to banks about embedding services like payroll, the conversation typically focuses on how banks are uniquely positioned to solve SMB pain points, such as cash flow management and real-time payroll,” said Liu. “Likewise, setting up a business bank account is often one of the first steps for new business owners, followed by accepting payments and then payroll.”

“So, it makes sense that all of these services are available in one place.”

Learn how to create customized products that meet the payroll needs of diverse SMBs to solidify your connections. Download the Gusto whitepaper here.

Cupid’s Got a Ledger: Romance and rivalry in finance

    A Valentine’s Month take on banks and fintechs


    Last week, I teased a mystery topic, letting you stew in curiosity about what was coming. Well, the wait is over! Given that Valentine’s Day was just last Friday, I’m leaning toward a theme that fits the season: unions & collaborations.

    We often dive into stories of partnerships that start with fireworks and flawless roadmaps — only to crash and burn for one reason or another. But today, let’s moonwalk through this. Let’s talk about rivals who went from side-eyeing each other to shaking hands (at least in the business world).

    Take banks and fintechs, for example. Their early days were more ‘battle for dominance’ than ‘let’s work together’ — fintechs painted themselves as challengers, while banks saw them as pesky invaders. But time and market realities have a way of reshaping narratives.

    Now, banks and fintechs are increasingly recognizing their strengths. It’s a classic ‘you complete me’ scenario — if corporate romance were a thing.

    Graphic credits: Tearsheet

    But let’s hit rewind for a moment. How did these once-feuding forces go from wary opponents to strategic allies? And where do these kinds of relationships stand now?

    Let’s dig in.

    Block vs. J.P. Morgan Chase: From competition to cooperation

    J.P. Morgan Chase initially saw Square (now Block) as a major small-business payment competitor. In 2014, CEO Jamie Dimon famously warned that Silicon Valley was “coming to eat our lunch.” Square’s success with small business payments and its Cash App product placed it in direct competition with Chase’s merchant services.


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    Payments Pulse: BNPL’s banking glow-up & Hey Block, you there?

      In finance & crypto, today’s misstep might just be tomorrow’s masterstroke


      The payments world is buzzing with fresh developments this week, especially on the BNPL front.

      Let’s talk about two payment-space scenarios where, based on my observations, the game has changed hands:

      • First, we have the rise of banks shaking hands with BNPL providers to supercharge their offerings — something that just a few years ago would have had most banks and regulators clutching their pearls.
      • Second, let’s check in on Block, which was once slammed by analysts for its Bitcoin obsession, but now it’s standing tall with all its chips in play.

      Let’s start with the BNPL scene.

      BNPL + Banks: The new power couple?

      Banks are finally getting cozy with BNPL. Who knew? For a while, BNPL was that rebellious teen that no one quite understood, especially regulators and financial institutions. But now, well, let’s just say it’s making some unexpected alliances.

      Affirm Card opens doors for banks: Affirm is bringing its Affirm Card, which offers both credit and debit features with pay-over-time, to third-party issuers. This means banks can now jump on the BNPL bandwagon with the Affirm Card, which first launched in 2021. 

      Through a partnership with FIS, Affirm is giving banks the chance to offer this pay-over-time service to their customers without asking them to carry around an extra card. Any bank that partners with FIS can now provide its version of the Affirm Card; no new plastic is required. So, in a way, it’s BNPL, but with a side of bank credibility. How’s that for a plot twist?

      Klarna is the chosen one for JPM’s B2B BNPL offering: J.P. Morgan Chase is making a major move in the payments space by teaming up with Swedish BNPL provider Klarna to bring BNPL options to its business customers.

      Through this partnership, businesses using J.P. Morgan Chase’s payments commerce platform will now have access to a BNPL service, giving them the flexibility to break payments over time. The integration is set to launch later this year.

      Block Check: Is Dorsey’s vision finally paying off?

      Switching gears to Block — in 2022, I did a story on Block and asked a question that seemed almost heretical at the time: Should Jack Dorsey’s Block return to its roots? Analysts thought Jack Dorsey was off his rocker for diving headfirst into Bitcoin a few years ago. They believed that he was betting the farm on a volatile digital currency with questionable prospects.


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      Trump, Crypto, and Banks: A love triangle with trust issues

        FIs are unsure whether to swipe right or left on the whole relationship

        As I sifted through the recent Trump and financial world shake-ups for this week’s 10Q installment (trust me, there were plenty), I finally zeroed in on today’s story — how crypto is taking on a new life under the president’s watch and what that could mean for Wall Street banks.

        In a move that has both crypto enthusiasts and traditional bankers adjusting their spectacles, Trump has gone full steam ahead into the world of crypto. From launching his own DeFi platform, Liberty Financial, to embracing meme coins and reshuffling government positions to favor digital assets, Trump’s dive into crypto is a rollercoaster ride, packed with twists, turns, and high stakes.

        For him, these initiatives aim to propel the United States to the forefront of cryptocurrency. 

        Some of his pivotal actions in this direction include:

        ~ From ‘I’m not a fan’ to ‘Let’s make crypto great again’Rewind to 2019, and Trump was calling Bitcoin a “scam” and tweeting that crypto was “based on thin air.” He’s now one of the loudest voices in crypto, a position solidified by the launch of his World Liberty Financial (WLFI).

        WLFI offers lending, borrowing, and yield farming opportunities in a way that, according to Trump, “keeps financial power in the hands of the people, not the globalists.”

        The platform operates with a strong focus on stablecoins, specifically those pegged to the US dollar, in an effort to solidify the dollar’s role in global digital transactions. Within weeks of launch, WLFI transferred $307 million in crypto assets to Coinbase Prime, raising eyebrows in both crypto and traditional banking circles.

        ~ Meme coins FTW? If WLFI was Trump’s serious play into DeFi, his next move was pure spectacle: embracing TrumpCoin (not officially affiliated with him, but heavily inspired). The meme coin skyrocketed overnight after he gave it a nod during a rally, stating, “I hear there’s a Trump coin. Maybe it’s the best coin. People love it.”

        While most politicians stay far away from meme coins, Trump has leaned in, fueling speculation that he may formally endorse a cryptocurrency of his own. And in the world of meme coins, a simple tweet or soundbite can send prices soaring — or crashing.

        ~ Crypto-friendly faces in high places: Trump’s been appointing pro-crypto figures to key government positions.

        David Sacks, a crypto advocate, was appointed to lead the SEC (U.S. Securities and Exchange Commission) sparking hopes of a more crypto-friendly policy shift that could ease digital asset integration for financial institutions.

        Sacks took to Capitol Hill this week to unveil the administration’s vision for cryptocurrency regulation. The Senate Banking, Senate Agriculture, House Agriculture, and House Financial Services Committees are joining forces to create a bicameral crypto committee. Their main focus is to create a stablecoin bill and set up a federal regulatory framework for digital assets.

        The Federal Reserve and FDIC are also considering pro-crypto policy shifts, encouraging deeper institutional adoption. Travis Hill, the acting FDIC chairman appointed by Trump, noted at the Senate Banking Committee this week that the FDIC is reevaluating its stance on crypto regulation to provide a clear path for FIs. The regulator is also revisiting its stance on insuring crypto-related deposits. If crypto firms get FDIC backing, it could make digital assets more palatable to mainstream banks and investors. 

        Hill also pointed out that the agency had previously made it harder for banks to engage with crypto, referencing past communications that discouraged such involvement.

        Cynthia Lummis, a longtime Bitcoin supporter, was also tapped by Trump for the position of Treasury Secretary. 

        Big Banks: Panic, Adapt, or HODL (Hold On For Dear Life)?

        Earlier, banks were happy with Trump’s pro-business and deregulation policies. But now, with the new president reshuffling the financial deck and rolling out the red carpet for crypto, banks are likely stuck in a corporate identity crisis. Should they dive headfirst into the DeFi space or stick to the tried-and-true methods that have kept them at the top?


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        Is AI your new work buddy or your pink slip in disguise? WEF 2025 Davos has thoughts

          Banks, Bots, and Big Ideas; but what’s the deeper insight we’re missing?



          Every January, the world’s finance players head to Davos, Switzerland, for the World Economic Forum (WEF). This year was no exception, running from January 20 to 24 under the theme Collaboration for the Intelligent Age.

          AI was last year’s favorite talking point, popping up in nearly every session. This year it was practically the event’s co-host, sharing the spotlight with American politics — the virtual appearance of the newly elected US President, and his polarizing comments about EU regulations, which didn’t exactly win him any fans.

          AI: The front and center

          Image Source: World Economic Forum

          At WEF 2025, AI wasn’t just a topic — it was the topic. From business to governance, nearly every session revolved around AI’s impact from different angles. Key discussions included:

          • Can National Security Keep Up with AI? (The risks and rewards of AI in defense)
          • Who Benefits from Augmentation? (A deep dive into AI-human collaboration)
          • Industries in the Intelligent Age (Which sectors are evolving — or disappearing?)
          • Media Briefing: Unlocking the North Star for AI Adoption, Scaling, and Global Impact (Finding AI’s true potential)
          • State of Play: AI Governance (Balancing innovation and regulation)
          • The Dawn of Artificial General Intelligence? (How close are we, really?)
          • AI: Lifting All Boats (Can AI drive growth for everyone?)
          • Reskilling for the Intelligent Age (Preparing the workforce for what’s next)

          Figuring out whether AI is a threat, a tool, or a team player

          AI’s influence in banking and financial services has been a hot-button issue for a few years now, and it’s only getting more interesting. Financial leaders at WEF boiled it down to 3 key takes on AI’s role in banking:

          1. AI as the job cutter: AI could shake up the job market, with potential job losses in banking as tasks become automated


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          Inside the mind of Wise’s New Commercial Director for North America and her ambitious plans

            From startups to stock markets, this new leader is ready to tackle the challenge head-on



            The start of a new year is often a time for goal-setting and implementing organizational changes. Wise Platform embraced this spirit by appointing Lauren Langbridge as its new Commercial Director for North America.

            In this role, Lauren will lead the expansion of Wise Platform’s strategic partnerships integrating into financial services firms, growth initiatives, and commercial strategies across the region.

            Before joining Wise Platform, Lauren worked at Currencycloud, a private UK-based firm that offers a fully cloud-based platform for B2B cross-border payments. She helped the company grow from a startup into a global player in cross-border payments. Visa acquired Currencycloud in 2021 for $963 million (£700 million).

            I had the opportunity to sit down with Lauren to learn about her career path, her vision for Wise working with banks, and how she’s managing the transition from a private firm to a leadership role in a public company operating extensively across North America.

            Lauren Langbridge, Commercial Director for North America at Wise

            How does managing strategies in a public company differ from your experience in a private firm?

            Lauren Langbridge: Having transitioned from a VC-backed private firm to a publicly traded company, I’ve experienced firsthand the differences and opportunities in managing sales and revenue strategies. One significant shift is the level of scrutiny and accountability. At a public company, there is a broader range of stakeholders — investors, analysts, and even employees — who are closely watching performance.


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            Big Banks, Big Bucks: After a mic-drop Q4 2024, what’s on the menu for Q1 2025?

              The 3’D’ Playbook: Dollars, Deals, and Dreams



              The confetti from New Year’s celebrations has barely settled, but the banking sector is already throwing its own party. This week’s Q4 2024 earnings results have been nothing short of a financial fireworks show, with big banks flexing their muscle in style.

              Leading the charge was J.P. Morgan, reminding everyone why it’s the heavyweight champion of US banking. Profits skyrocketed 50% to $14 billion for the quarter. Revenue? Up 10% to $43.74 billion, contributed by a net interest income of $23.47 billion that exceeded analyst expectations. J.P. Morgan isn’t just making money — it’s making history.

              Citi brought home a solid $2.86 billion in net income for the final 2024 quarter. Its investment banking arm stole the spotlight, with revenue rising 35% YoY to hit $925 million.

              The numbers painted an equally lively picture over at Goldman Sachs, Wells Fargo, Bank of America, and Morgan Stanley.

              Goldman’s profit roughly doubled from a year earlier to $4.11 billion. Revenue soared 23% to $13.87 billion, driven by strong gains in equities and fixed-income trading, along with improved investment banking results. Wells Fargo posted a 47% surge in net income, reaching $5.1 billion, up from $3.45 billion in the same quarter last year, with revenue hitting $20.4 billion. Bank of America delivered $6.67 billion in net income on $25.35 billion in revenue. Meanwhile, Morgan Stanley more than doubled its quarterly profit to $3.71 billion, fueled by a standout performance in its equities trading division, which saw revenue skyrocket 51% to $3.3 billion.

              The Sweet Spot

              Even before the ball dropped on New Year’s Eve, banks were riding a wave of optimism, and here’s why:


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              The calendar flipped, and so did the market trends

                Markets are hitting refresh for the new year!



                Wishing you a fantastic start to the New Year and an amazing journey ahead!

                Let me ask the question we all know the answer to: “New Year, New Me?” Pfft, we’ve all overused that resolution like a credit card with no limit. The financial services industry has its fair share of those shiny pledges.

                But here’s something intriguing to kick off my first 10Q Newsletter of 2025: this year didn’t just start on a positive note — the industry’s optimism actually started brewing before the ball dropped. That’s a refreshing change from the gloom and doom of recent years. So, let’s dive into how and why the financial world is stepping into 2025 with a little extra spring.

                On a broader, behind-the-scenes level, December — when holiday vibes trump work emails — turned into a surprise whirlwind for us. Instead of the usual festive lull, we experienced an inbox overload with a flurry of company news, pitches, and developments. Clearly, this 2024 December decided to break tradition.

                On the external front, I’m noticing a few key trends emerging in the markets and public firms. The IPO scene for 2025 is gearing up for a surge, AI looks primed for yet another standout year, and Web3 is showing signs of a triumphant return (looks like AI’s got some competition in the ring this year).

                Let’s take a moment to see what’s taking shape in each of these areas.

                The 2025 IPO landscape

                Many big names are gearing up to make their market debut, including:


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                A rapid-fire round through the year’s hottest 10-Q stories

                  Let’s hit the 2024 highlights!



                  2025 is here, and with it comes the excitement of fresh starts and new horizons. But before sprinting into the future, let’s take a thoughtful pause to reflect on last year’s journey.

                  Join me as we explore the highlight stories from the 10Q universe and celebrate the close of 2024!

                  The Case for Connected Experiences: U.S. Bank’s vision for SMB growth

                  Back in February 2024, I spoke with Shruti Patel, the Chief Product Officer for the Business Banking Segment at U.S. Bank. We talked about all things SMBs — what’s working, what’s not, and how financial institutions can step up their game.

                  One thing that really gets me is the sheer tenacity of small business owners. Balancing responsibilities and confronting obstacles daily, they persevere with unwavering hope for better financial opportunities. Where does that confidence come from?

                  According to Shruti, SMB owners are resilient, adaptable, and always ready to tackle whatever comes their way. They chalk it up to their work ethic, leadership skills, and adaptability. And they’re pretty good at managing stress too.

                  In a U.S. Bank survey, small business owners revealed some of their secret stress-busting hacks:

                  • Reminding themselves why they started their business (aka the “this is my dream” mantra)
                  • Making work fun or meaningful (because why not?)
                  • Setting boundaries (read: not answering emails at midnight)
                  • Regularly tweaking their business strategies (change is good)
                  • Hiring help to lighten the load (delegation can be a superpower)

                  But here’s the rub: Small business owners wear all the hats — CEO, accountant, HR, janitor — and their biggest pain point is a lack of time. Enter digital solutions, the capes SMBs need to wear to save the day, according to Shruti. She shared that 82% of small business owners believe investing in digital tools could reduce their stress, and 42% say it would free up time for more strategic work.

                  Historically, banks have given their SMB customers more and more money movement solutions for accepting payments and for making payments (POS, ACH, Zelle, Wires, RTP, BillPay in banking app). The real puzzle isn’t just about building the tech — it’s about translating it into SMB-speak. For many small business owners, payment rails might as well be train tracks to nowhere. They’re burning $200 a month on a jumble of tools and sacrificing up to 40 hours playing admin instead of entrepreneur, explained Shruti.

                  Shruti’s take? It’s time for financial institutions to step up and deliver smoother digital tools that bring everything together in one place. This could be a central dashboard that connects all the dots — front office, back office, and everything in between — combined with other measures.

                  Partnerships: The Good, the Bad, and the “What were we thinking?”

                  Last year, partnerships have been front and center — some thriving, others combusting (hint: Apple-Goldman). With collaboration such a hot topic, I reached out to industry pros to get their take on how to prevent cracks in collaborations.


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                  Trump’s Finance Focus: Fintech leaders now in government spotlight

                    Finance and politics — the perfect storm of power and policy



                    The dust is settling, and the nation is slowly adjusting to the idea of Donald Trump’s return to the White House. Although he won’t officially assume office until January 20, 2025, his goals and plans are already emerging at a brisk pace via Truth Social, dropping occasional curveballs to the public — in classic Trump fashion.

                    Last month, we explored the key cause-and-effect dynamics that could shape the banking sector under Trump’s second presidency. This week, our spotlight shifts to his newest team members, who operate at the tricky intersection of finance and politics.

                    In November, Trump made headlines with one of his first appointments: Matt Gaetz, a lawyer and politician, to lead the Justice Department. The decision sent shockwaves through the financial sector, as Gaetz’s controversial history — highlighted by a federal investigation into allegations of sex trafficking (which ultimately did not result in charges) — added a layer of unpredictability to Trump’s prospective tenure.

                    More recently, the newly elected 47th President, tapped some seasoned financial leaders to oversee pivotal roles in his government, signaling his strong intent to weave financial expertise into the fabric of his administration.

                    Financial heavyweights ready to step into key roles within Trump’s administration include:


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