How Banks Can Win More of the Small Business Relationship

Small business owners remain optimistic, but they are also becoming more demanding of their financial institutions. Findings from a ProSight survey of 600 small business owners, presented during a recent Banking Outlook webinar, show that 72% expect their financial situation to improve over the next six months, even as rising expenses put more pressure on margins. 

The survey identified three priorities shaping business decisions: growth, operational efficiency, and cash flow management. Banks that help address those needs—while delivering a smoother digital experience—have a chance to deepen valuable relationships. 

For banks, the findings highlight four clear opportunities: 

Extend advice to smaller businesses. Only 51% of businesses with less than $1 million in annual revenue report having a relationship manager, even though that group represents most of the market. Smaller firms often turn to branches for guidance, while larger businesses receive more proactive outreach. Banks may need scalable ways to deliver useful advice before a business becomes large enough to qualify for traditional relationship management. 

That support should connect to what owners are trying to accomplish. Conversations about managing cash flow, improving efficiency, and financing growth are more likely to resonate than a generic product pitch. 

Make digital banking dependable. More than half of small businesses—and more than 60% of those with revenue above $1 million—say they would switch institutions for better digital capabilities. Owners want always-on access, faster payments, and platforms that are intuitive and consistent. 

Frequent interface changes can create frustration by forcing users to relearn familiar tasks. Digital onboarding also remains a trouble spot, with identity-verification failures, technical problems, and complicated workflows contributing to abandoned applications. Banks still have to balance speed with fraud controls, but reducing avoidable friction should remain a priority. 

Treat switching risk as an acquisition opportunity. About 28% of small businesses may be considering a new primary financial relationship. Fees remain the leading reason for switching, followed by reputation and interest rates, while digital capabilities and advisory support become increasingly important as businesses grow. 

Winning primacy carries substantial value. The primary institution holds more than two-thirds of a business’s deposits on average, along with a significant share of its borrowing. 

Recognize business owners already in the customer base. Roughly 87% of owners use the same institution for personal and business banking. Many begin with a personal deposit relationship and approach that provider when opening a business. Identifying those customers earlier can help banks support the transition and retain more of the relationship as the company grows. 

The takeaway: Small businesses are looking for a useful combination of advice, reliability, and digital convenience. Banks that make guidance easier to access and routine tasks easier to complete will be better positioned to retain primary relationships—and attract owners whose current institutions are falling short.