Banking the Entrepreneurial Transition

BTomorrow’s business customers may already be sitting inside today’s retail account base. They may be taking payments for a side hustle, testing a business idea after work, selling services through social media, or building a microbusiness that has not yet found its way into a formal business banking relationship. 

In two ProSight Q&As, Chris McNulty, director of strategic partnerships and product management at Jack Henry, and Manny Tocco, head of business banking sales at Citizens, describe a growing opportunity at the overlap of consumer and business banking. The challenge is finding those customers early enough to help them grow—and before another provider becomes their default financial partner. 

A few key points: 

Find the business activity already in retail accounts. McNulty says many businesses still operate out of personal accounts, even though they would benefit from business tools and local support. The business case is clear:The deposit opportunity is significant: He says the SMB segment’s average deposit balance is 4.6 times larger than average retail deposits. Data analytics can help institutions identify “hidden businesses” inside the retail base, while Tocco points to analytics, personalized marketing, and invitations to apply as ways to introduce relevant business banking solutions. 

Engage before the business is fully established. Tocco’s framing is simple: “What starts as a side hustle today can become tomorrow’s small business.” That makes early engagement important. Institutions can support customers as their needs move from personal banking toward business accounts, lending, payments, and advisory support. 

Take Gen Z’s entrepreneurship seriously. Tocco says Gen Z is increasingly viewing work as a “portfolio of careers,” with multiple income streams, flexibility, and autonomy. Citizens research found that two-thirds of young adults have pursued some form of entrepreneurial venture, while nearly one-quarter are pursuing one in addition to a primary job. McNulty adds that entrepreneurial activity now spans demographics, though Gen Z may be especially motivated to start businesses. 

Compete with fintechs by staying at the center. McNulty warns that fintechs have captured a large share of the micro merchant market and are now offering traditional banking services to those customers. But the answer is not limited to direct competition. He says partnering with the right fintechs—and sourcing those services through the financial institution—can help protect the relationship while reducing the number of apps or platforms customers have to manage. 

Blend digital tools with human guidance. Younger customers expect seamless digital experiences, but Tocco says that does not eliminate the value of in-person guidance. Citizens research also found that 78% of young adults want their bank’s help beyond saving and spending, including guidance, financial education, funding solutions, and tools that help them move from idea to growth. 

Solve the everyday operating needs. Beyond lending, McNulty identifies payments, payment acceptance, and cash flow management as mission critical for micro merchants and emerging businesses. With the right partners, he says, community financial institutions can meet those needs.  

The takeaway: The entrepreneurial transition gives banks and credit unions a chance to deepen relationships before competitors do. Institutions that spot business activity early; tailor outreach by generation; and connect customers to payments, cash-flow support, lending, and advice can grow alongside them—from early venture to larger small business. 

For more on the side-hustle and gig-business opportunity, download ProSight Perspectives, “Growing Beyond Traditional Boundaries: New Strategies for Small Business and Gen Z Engagement.”