Turning payments data into real-time action

Small businesses are central to community vitality and economic momentum, creating nearly 61% of net new jobs and accounting for approximately 43% of GDP. Yet they face more volatility than ever from frequent, costly natural disasters, shifting consumer digital habits, and economic uncertainties like new tariffs and inflation.

During these times, small and mid-sized businesses turn to their bankers for capital and guidance. The good news? Financial institutions can tap into one of their most valuable intelligence drivers: payments data.

A line of sight into consumer spending trends and small business sales in their community, payments data offers detailed, near real-time insights and granularity that can be used to differentiate performance across small business type, industry, and geographic locations.

Effective use of this data allows financial institutions to lend more inclusively, respond swiftly during crises, make smarter branch decisions, and support small business growth in their communities.

Smarter lending, beyond credit scores

Traditional underwriting relies on credit scores, years of financial statements, or collateral. However, these methods can fall short, often because credit reporting latency does not provide a timely view of the current economy, disadvantaging younger and smaller firms.

When financial institutions can analyze key business indicators, like transaction volume, seasonality, or average ticket size in near real time, they have a better view into business performance and can more accurately assess business health and cash flow resilience. In fact, our research indicates that payments data is a strong indicator of business health.

For instance, companies that experience 20% revenue growth over the previous six months have a 30% lower default rate than the industry average. Conversely, a 20% decline in sales results in default rates that are 53% higher.

These signals enable more inclusive, data-informed credit decisions, reducing risk without retreating from opportunity, so banks can better serve their stakeholders.

Act fast when crisis hits

When sudden disruptions hit, small businesses are on the front line of impact. They often experience sharp revenue drops that can threaten their survival long before official economic data or disaster relief funds arrive.

In September 2024, Hurricane Helene devastated Asheville, N.C., with record rainfall and flooding, crippling small businesses. According to the Fiserv Small Business Index, sales plunged 74% in the first four days post-landfall and remained down 28% a month later. While recovery is underway, the city has already lost over $560 million in sales.

Financial institutions with access to granular data can monitor the impact on local businesses by sector and geography, allowing them to act faster and more precisely. They can use this intelligence to proactively offer payment deferrals, emergency loans, or targeted outreach in the days and weeks following an event.

Speed matters. The median small business has a cash buffer of just 27 days. Meanwhile, 40% of small businesses that close after a disaster never reopen, and another 25% close within a year.

Rethink branch strategy

Branch strategy is often driven by cost, traffic, and digital migration trends. Consequently, many banks have consolidated or closed branches in recent years – the total number of U.S. bank branches declined by 5.6% between 2019 and 2023, a trend that has continued into 2025.

However, data reveals that branch closures can have unintended ripple effects, including increased business exits in the surrounding area and a decline in new businesses. According to a recent Fiserv study, when a local branch left the community, over 7% of small businesses closed within one year, and remaining businesses saw sales decline by over 3%.

Branches matter, and payment data can quantify the impact and guide better branch strategy decisions. By analyzing localized payment flows before and after a branch closes, banks and credit unions can measure changes in small business revenue or retention in the surrounding area.

Turn data into actionable advice

Small businesses view their financial institution as a key partner, not just a place to park funds. Increasingly, they expect that partnership to include data-driven insight.

Financial institutions that provide SKU-level point-of-sale data to merchants are uniquely positioned to deliver actionable insights. For example, merchants leveraging POS systems can analyze their own sales and benchmark performance against peer businesses—enabling real-time decisions on product mix, pricing, operating hours, inventory, and staffing.

In recent surveys, 84% of small and mid-sized businesses receiving financial guidance say they see their banker as a key advisor. J.D. Power found that customer satisfaction jumped 34 points among small business banking clients who received proactive financial health support.

Financial institutions that use granular payments data to offer personalized recommendations can deepen relationships and increase client retention. This strengthens the advisory role, boosts satisfaction, and improves outcomes for both the institution and the businesses it serves.

A data-driven future for relationship banking

Many community banks and credit unions recognize the potential of advanced analytics, but most are not yet equipped to implement them at scale. In a 2024 survey, over 90% of community banks said they were ready to pursue digital transformation, yet fewer than 20% consider themselves experts in data analytics.

Closing this gap is essential. Leveraging transaction-level data will influence customer outcomes and local economic resilience.

Institutions that utilize real-time data to identify opportunities, assess risks, and provide timely guidance will stand out. They will be able to say yes to the thin-file borrower, reach out to distressed businesses before default, and offer smart recommendations to help customers grow.

The technology and data are already available. Financial institutions that invest in infrastructure, partnerships, and personnel will lead the next phase of small business banking, not just as lenders but as strategic partners that foster community growth.

Prasanna Dhore is Chief Data Officer and President of Data Commerce Solutions at Fiserv.