The Intersection of Financial Institutions and Technology Leaders

Why Small Business Is a $400 Billion Priority for Community Banks

By Kiah Lau Haslett


Small businesses are a “$400 billion” growth opportunity for community banks, but they face a number of challenges to making inroads in this space, according to Lee Wetherington, senior director of corporate strategy at Jack Henry & Associates. 

In this episode of Reinventing Banking, host Kiah Lau Haslett sits down with Wetherington, to preview the latest results from Bank Director’s 2023 Technology Survey, which publishes on Sept. 18.

The survey shows that community bank executives are continuing their digital transformation. Wetherington says that banks that have previously focused on growing loans are shifting to a strategy focused on retaining existing deposits and attracting new ones. They increasingly see small businesses as the next area for growth. 

But there are major challenges — and competitors — when it comes to serving small businesses, Wetherington points out. Nonbank technology competitors prioritize payment processing and capital financing, capabilities that the Technology Survey reveals banks may not offer. Wetherington says that some banks have already lost some business to fintechs like Block’s Square and PayPal Holdings, which have made significant inroads in becoming the primary financial service provider to many small businesses. But community financial institutions may have a couple of advantages they can leverage, including staff that can assist small business customers and branches. 

“The correct frame is not ‘Is it branch or is it digital?’ but ‘How can we … take what is so differentiating about our people and our personal service and now turbocharge it and make it available in real-time inside of the digital channel?’ These things are not mutually exclusive,” he says.

In addition to Bank Director’s 2023 Technology Survey, this episode cites Columbia University and the University of Chicago research about digital banking and deposit runoff and a National Bureau of Economic Research report on branch density and bank runs.

Kiah Lau Haslett is the Banking & Fintech Editor for Bank Director. Kiah is responsible for editing web content and works with other members of the editorial team to produce articles featured online and published in the magazine. Her areas of focus include bank accounting policy, operations, strategy, and trends in mergers and acquisitions.