Banks have long focused on competing for small business accounts through interest rates, fees, and rewards programs, treating the relationship as transactional from the outset.
Relying on this approach alone is now losing ground. New research from Grasshopper Bank reveals that only 7% of small business owners see their bank as a true strategic partner. This gap points to a deeper disconnect between what banks offer and what business owners actually need from them today.
Tearsheet’s Managing Editor, Sara Khairi, spoke with Danielle Kane, SVP and Head of Small Business Banking at Grasshopper Bank. Kane breaks down why banks’ outreach to small business owners so often defaults to sales pitches rather than hands-on guidance, what’s missing from small-business banking products, and what SMB banking could look like five years from now.
Danielle Kane, SVP and Head of Small Business Banking at Grasshopper Bank
Q: Why do you think only 7% of SMBs see their banks as trusted advisors today? Is this a trust problem or an engagement problem?
Danielle Kane, Grasshopper: It is fundamentally an engagement problem that has eroded trust over time. For decades, traditional banks have equated “advising” with “cross-selling.” When a traditional banker reaches out to a small business owner, the owner instinctively braces for a pitch about a new credit card or a line of credit. In our recent Beyond Small survey, we found that what small business owners desperately want is real-world strategic mentorship – both for their operational scaling and their personal growth. But traditional finance completely ignores the mental tax of running a business. If your engagement model only surfaces when there’s a product to sell or a fee to collect, you never build the relational foundation required for actual trust.
Q: What are banks getting fundamentally wrong; is it the products, the technology, or the relationship model itself?
7% of small business owners consider their bank a true strategic partner, according to a recent Beyond Small survey by Grasshopper Bank. Meanwhile, 65% see their bank primarily as a utility, and confidence in banks as drivers of business growth sits at just 5 out of 10.
Banks have spent years talking about becoming trusted advisors to their customers. The problem is that many still operate like utilities. That disconnect matters more now that running a small business increasingly requires decisions that don’t fit neatly into a banking product: whether to hire, expand, preserve cash, invest in infrastructure, or navigate uneven demand.
The question for banks, then, is whether they are equipped to play the role of advisor in an AI-driven financial landscape.
Danielle Kane, SVP and Head of Small Business Banking at Grasshopper Bank
Danielle Kane, SVP and Head of Small Business Banking at Grasshopper, thinks the problem starts with how banks have defined the client relationship. “It is fundamentally an engagement problem that has eroded trust over time,” she says.
She argues that banks have too often equated advice with cross-selling. “When a traditional banker reaches out to a small business owner, the owner instinctively braces for a pitch about a new credit card or a line of credit.”
This makes it difficult to build the kind of relationship banks say they want.
For small businesses, sending an ACH payment, an international wire, or a cross-border payment often meant switching between different tools, navigating different workflows, and reconciling everything afterward.
As financial operations become more digital and interconnected, banks are expanding their infrastructure to help small business owners understand what’s happening inside their own operations and act on it before the moment passes.
From funding businesses to supporting daily operations
Banks that move early to offer SMBs intelligent digital banking will play a much bigger role in how small businesses operate day to day.
Shena Ashley, President of the Capital One Insights Center, says banks are evolving from providers of capital into providers of operational intelligence. SMB confidence is increasingly driven by access to integrated digital tools that give owners better visibility into cash flow, simplify financial operations, and help them make smarter decisions beyond just accessing funding.
Capital One’s research reflects that shift: 79% of SMBs use integrated accounting and bookkeeping platforms, 51% say those tools free up time for growth, and nearly three-quarters report that fragmented financial systems make cash-flow management harder, highlighting why connected financial tools are becoming as important as capital itself.
As a result, banks are positioning themselves as the central platform that connects a small business’s financial operations – from payments and accounting to cash-flow forecasting and credit – instead of allowing third-party software providers to own that relationship.
U.S Bank has also made moves in this direction. Just this month, the bank introduced Enhanced Payments, a new solution integrated directly into its online banking platform and mobile app that allows small businesses to initiate ACH payments, instant payments, domestic and international wires, including digital international wires without visiting a branch, from a single interface.
As SMBs increasingly manage domestic, real-time, and cross-border payments simultaneously, the challenge is moving money without fragmented systems and manual workflows. By bringing multiple payment options into one digital experience and helping businesses choose the right rail for each transaction, U.S. Bank is positioning its platform as the operational hub for SMB cash management.
Where banks see the next opportunity
These initiatives reflect what banks are choosing to build. Lending and payments remain the baseline every bank offers, but they’re increasingly being wrapped in features that give business owners a clearer view of their finances, simplify operations, and help them act faster. The goal is to become the platform where owners manage cash flow, make financial decisions, and run more of their day-to-day operations.
Within the span of a week, SoFi, Square, and Capital One each shared new developments and research for their small business clients. SoFi launched new loans, Square unveiled AI integrations, and Capital One published new research. The common thread across these announcements is competing to help small business owners save time by becoming a bigger part of their day-to-day operations.
Three companies, one focus area
SoFi’s new small business loans are designed around speed. Eligible businesses can check their eligibility in minutes and receive funding as soon as 24 hours after approval. The company is betting that access to capital should happen with the same ease as the personal financial products members already use. CEO Anthony Noto noted that entrepreneurs’ financial lives don’t stop at personal goals; they extend to the businesses they’re building.
Square is tackling another bottleneck: customer acquisition. Its new ChatGPT and Claude integrations help merchants appear inside AI-powered conversations, while its Alexa+ partnership extends that discovery into voice commerce. Instead of asking merchants to keep up with every emerging AI channel, Square wants to make sure they’re present wherever customers are making purchasing decisions.
Capital One’s latest research ties these ideas together, examining how small businesses are navigating today’s economy and why integrated financial tools are becoming increasingly central to their growth. More than 75% of small business owners say they’re confident in their ability to grow, while 69% believe they’re already positioned for expansion. Yet nearly three-quarters say fragmented financial systems make it difficult to manage and predict cash flow. According to Shena Ashley, president of Capital One’s Insights Center, today’s entrepreneurs are increasingly looking for integrated financial tools that give them greater visibility and control over their businesses.
Time is becoming the competitive advantage
The three announcements tackle different problems, but they’re chasing the same outcome.
SoFi reduces the time it takes to access capital. Square reduces the effort required to acquire customers. Capital One argues that integrated financial tools reduce the administrative burden of running a business.
That’s an ongoing evolution in how financial services in the SMB space are being positioned. Banks and fintechs are moving beyond standalone products. toward operating systems that combine financing, payments, customer acquisition, and financial management into a single workflow.
The next employee isn’t human
Increasingly, that’s what the next employee looks like: a financial platform that handles more of the operational workload, giving business owners more time to focus on customers, growth, and the decisions only they can make.
On a late summer morning in New York City, industry leaders gathered at Mastercard’s Innovation Hub for Tearsheet’s flagship The Big Bank Theory Conference 2024. The event this year was dedicated to exploring the future of small business support in the financial sector. Attendees, ranging from fintech startups to established banking incumbents, anticipated insights from some of the most influential voices in the field.
Setting the Stage: The Global Impact of Small Businesses
Kicking the day off was Salah Goss, Senior Vice President for Social Impact at MasterCard’s Center for Inclusive Growth. Goss began by painting a vivid picture of the small business landscape worldwide.
Salah Goss, Senior Vice President for Social Impact, MasterCard
“Imagine a world without small businesses,” Goss challenged the audience. “It’s almost impossible, isn’t it? That’s because small businesses make up 90% of businesses and 50% of employment worldwide. In the US alone, they account for 50% of the GDP.”
Goss went on to introduce MasterCard’s “Strive” program, a global initiative designed to support small businesses through three key pillars:
Access to credit
Access to digital tools and digitization
Access to networks and know-how
She shared an inspiring success story that brought these pillars to life. “Let me tell you about Brian,” Goss said. “She’s an urban farmer in Watts, a community in LA, where we support an organization called Think Watts. Through our digital payment tools and analytics, She could suddenly see which plants her local farmers’ market preferred – indoor houseplants or outdoor flowers. Brian’s sales skyrocketed by 70%. That’s the power of digitization for small businesses.”
Goss continued, “In Strive USA alone, we’ve already helped partners unlock about $44.2 billion in affordable credit to small businesses. But we’re not stopping there.”
Beyond the goods and services SMBs offer they often also function as community hubs. Critically, SMBs provide jobs and fuel for their local economic engines; just under half of private sector employees are employed by one of the 34,000,000-plus SMBs in the US.
While every business is unique, there are some common challenges— concerns around tracking, forecasting, and understanding cashflow, for example. Time is another: SMB owners and managers wear so many hats, from selling a product or service to often serving as a one-person HR department.
“Running a small business is hard and owners are looking for help. Frequently, they’re turning to the partners they already trust, like their banks, to help solve these pain points. As our co-founder and CPO, Tomer London, likes to say, ‘There’s never been a better time to build tools for SMBs.’ Banks have an incredible opportunity to do just that,” said Yi Liu, General Manager of Gusto Embedded.
The Art of Partnership: A Banker’s Perspective
Mark Valentino, President of Business Banking at Citizens Bank took the stage, dressed in what he jokingly referred to as his “banker’s uniform.”
Mark Valentino, President of Business Banking, Citizens Bank
“I was told to give a TED-style talk,” he quipped, “but I don’t own any turtlenecks, so you’ll have to settle for this suit.” The room broke out in laughter, creating a warm atmosphere for his insights on the importance of partnerships and integration in small business banking.
He outlined three key principles, emphasizing the importance of understanding small business needs. “We call it the guiding North Star,” he explained.
Truly understanding the needs of small businesses. Are you solving the right problems? “Because let me tell you, we’ve all been guilty of rolling out great ideas that solved the wrong problem.” Valentino emphasized that it is critical to identify customers’ pain points accurately, and not just roll out great ideas that don’t address their actual needs.
Integration and creating seamless, frictionless experiences for customers. He discussed the importance of integrating solutions within the Citizens ecosystem so customers don’t have to juggle multiple applications. “Everything we’re doing at Citizens is about integration. We want [our business customers] to live in there and be able to do everything, whether it’s their payroll, payments, or their invoicing needs. We want them to be able to interact with their customers and their vendors all in one sign on,” he said.
Fostering a culture of growth, not just for Citizens’ own profitability, but for helping small business customers grow and succeed. He gave examples of partnerships like Mastercard Digital Doors, which offers marketing and financial tools to small businesses, and Luminary, a gender inclusive, global professional education and networking platform created to address the systemic challenges impacting women and our allies across all industries and sectors.
The banker painted a vivid picture of the typical small business owner’s challenges. “Picture this,” he said, gesturing to the audience. “An electrical contractor in Boston, a minority-owned consulting firm in New Jersey, and a veteran-owned orthopedic treatment center in New Hampshire. What do they have in common? They’re all going up against larger competitors, struggling to hire and retain employees, and they’re all super stressed out. They’re short on time and long on problems.”
To aid SMBs get things done fast one way is to consolidate tools. “Time-strapped SMB owners increasingly seek integrated solutions to solve their business’s needs. That’s why there is traction among banks looking to offer additional value-added services to their SMB customers, whether payroll, point-of-sale solutions, or invoicing services,” said Liu.
The Digital Revolution in SMB Payments
As the event progressed, Chris Ward, head of enterprise payments at Truist, took the stage to discuss the evolving world of small business payments. Ward introduced what he called the “3S’s of the economy”: Simplicity, Speed, and Safety.
“Think about the last time you ordered something on Amazon,” Ward challenged the audience. “Did you need someone to come to your house and teach you how to do it? Of course not! That’s the level of simplicity we need to strive for in financial services.”
Chris Ward, Head of Enterprise Payments, Truist
Ward delved into the persistent use of checks in small business transactions. “You’d think after the pandemic, everyone would have abandoned checks,” he mused. “But here’s the kicker – check volume in B2B transactions is still growing!”
This revelation led to a fascinating discussion on fraud risks associated with checks. Ward shared an anecdote about his daughter, who also works in the payments industry. “She’s always joking with me about her smaller customers,” Ward chuckled. “I can’t believe these customers don’t use Positive Pay,’ she says. It’s a family affair in payments, folks!”
Cash is still king for SMBs
Scott Beyer, Head of Business Banking Digital Experience at US Bank, presented on the changing payment and cash flow needs of small and mid-sized businesses (SMBs). He highlighted how these needs are driving SMBs to adopt new technologies, and how financial institutions (FIs) can simplify the complex ecosystems SMBs operate in.
Scott Beyer, Head of Business Banking Digital Experience, US Bank
He discussed findings from a recent US Bank survey, which revealed that 87% of small businesses remain optimistic about their future, despite challenges such as inflation and talent shortages. Small business owners are eager to adopt technology that helps streamline operations, but they seek solutions that save time and allow them to focus on running their businesses rather than managing financial processes.
Beyer identified three critical areas for FIs to focus on:
Availability of Digital Products: Ensure banking products are easily accessible and digitally available, enhancing convenience for small business customers. Integration of Services: Build seamless internal and external integrations to simplify business banking, payments, and other operations for clients. Data Harmonization: Align and consolidate fragmented data to deliver personalized insights and streamline financial management for small businesses.
Beyer concluded by urging banks to prioritize investment in infrastructure and data integration to create a more connected banking, payments, and software ecosystem that better serves SMBs.
When conceptualizing what their software ecosystem is going to offer to their SMB clients, banks need to consider the biggest pain points for these customers. “Running payroll for 300k+ SMBs has taught us a few lessons about SMB cashflow. Many customers tell us payroll is their largest regular expense. And meeting payroll each week — will they have the funds, will payments from customers clear in time, do they need to access a line of credit — can be a source of stress. However, banks also have visibility into the revenue side of an SMB business and are in a unique position to offer payment options and digital tools that help SMBs better understand, manage, and forecast their end-to-end cashflow,” said Liu.
Embracing the Future: AI and Beyond
The event included a look toward the future with a discussion on emerging technologies. Goss shared MasterCard’s latest innovation – an AI-driven chatbot for small businesses.
“But here’s what makes it special,” Goss explained. “It’s inclusive. When business owners from underrepresented communities ask a question, the response reflects their unique experiences and needs. It’s not just a chatbot; it’s a digital ally that truly understands them.”
After the day’s speakers and three closed-door working groups exploring SMB issues in depth, it was time for networking before calling it a day. This year’s The Big Bank Theory was a catalyst for change, intimating a new era of empowerment for small businesses in the digital age. As one attendee was overheard saying, “This isn’t the end of the conversation. It’s just the beginning.”
In a recent podcast episode, I had the pleasure of speaking with Jameson Troutman, Head of Product at Chase for Business. With over 20 years of experience in financial services, Jameson shared valuable insights into the current state of small and medium-sized businesses (SMBs) in the U.S. and the innovative solutions Chase is offering to support them.
As Jameson puts it, “Small businesses in general are optimistic. They love supporting their customers and have a strong belief in their ability to power through any challenges.” This optimism is crucial, especially as SMBs navigate macroeconomic challenges such as inflation and cash flow management.
The current state of SMBs in the U.S.
Jameson emphasizes that despite economic challenges, the overall sentiment among small businesses remains positive. “We survey about 500 small businesses on a regular basis every month,” he explains. The data reveals that while 63% of SMBs are feeling the impact of macroeconomic forces like inflation and cash flow issues, they remain confident about their growth prospects. This optimism is fueled by their passion and creativity in overcoming daily challenges.
Addressing SMB’s cash flow challenges
One of the perennial issues for SMBs is managing cash flow. Jameson highlights that Chase is actively working to provide solutions that help businesses manage their receivables and payables more efficiently. “We’re bringing out new invoicing solutions and additional abilities to get paid faster through some of our real-time payments capabilities,” he shares. These innovations are designed to help SMBs maintain a healthy cash flow, which is critical in today’s economic environment.
Innovative payment solutions
Chase has recently launched several new capabilities aimed at simplifying financial operations for SMBs. One such solution is the faster payments capability, which allows businesses to choose how quickly they want their payments to be processed. “The flexibility gives them a lot of control,” Jameson notes. This feature helps SMBs manage their cash flow more effectively and can even provide preferential treatment from suppliers due to immediate payment options.
Enhanced invoicing capabilities for SMBs
Chase’s new invoicing capability is another new impactful product for Chase clients. This tool allows business owners to create, customize, and send invoices directly from their digital experience. “It saves them time because they don’t have to do manual reconciliation,” Jameson explains. The system supports multiple payment methods and auto-reconciles transactions, streamlining the entire invoicing process and improving cash flow management.
Leveraging customer insights
To help SMBs grow and drive revenue, Chase is launching a new data-driven product called Customer Insights. This tool provides anonymized transaction data to help businesses understand sales patterns and customer behavior. “It allows them to figure out how they tighten and get smarter about their marketing dollars,” Jameson says. This valuable data helps businesses make informed decisions about staffing, marketing, and other operational aspects.
The big ideas
Small businesses remain optimistic despite economic challenges. “They love supporting their customers and have a strong belief in their ability to power through any challenges.”
Chase is introducing solutions like faster payments and new invoicing capabilities to help SMBs manage their cash flow better.“We’re bringing out new invoicing solutions and additional abilities to get paid faster.”
The faster payments capability offers SMBs flexibility in managing their transactions, providing control and potential benefits from suppliers.“The flexibility gives them a lot of control.”.
The new invoicing tool simplifies the invoicing process, supporting multiple payment methods and auto-reconciliation. “It saves them time because they don’t have to do manual reconciliation.”
The Customer Insights product leverages anonymized transaction data to help SMBs make informed decisions and drive revenue. “It allows them to figure out how they tighten and get smarter about their marketing dollars.”
