Give Small Businesses the Reasons to Choose You
What if we could digitize the end-to-end journey for small businesses? What would that look like, and what would we need to take into consideration? This panel discussion from the CONNECT 25 customer conference tackled that question and revealed some big opportunities to serve this segment better.
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Transcript
Cheryl Brown
Welcome to The Purposeful Banker, the leading commercial banking podcast brought to you by Q2, where we discuss the big topics on the minds of today’s best bankers. I’m Cheryl Brown.
Today I’m sharing another panel discussion from Q2’s CONNECT customer conference we held in May. In this one, Dean Jenkins is joined by Deidra Barret from Guaranty Bank, Ryan Hill from Trustmark Bank, and Kevin Miyamoto from Identifee as they tackle a big question: What if …
What if financial institutions could digitize the end-to-end services for small businesses? What would that look like, and what would it need to take into consideration? Listen in to hear how the conversation went, and maybe you can get some ideas for your bank or credit union.
Dean Jenkins
This is a picture that I had of my wife and my daughter's business back in 2023 at CONNECT, and I talked about how they had just started this business providing succulents as gifts for different reasons, and they built this business from scratch. It was my daughter's idea that she had received some flowers, and she said, "Wouldn't it be great if we had something that lasted a long time? And these flowers die in a week or two." And so that's how she came up with the idea.
And the whole idea was that they were just getting into business and what were some of their needs that they had as a new startup business. And so that's my wife, my daughter, and then the little girl is my granddaughter, Lily, and she's part of the business now. She's probably going to inherit this business from my wife and my daughter at some point.
But the whole idea here is that small businesses and the owners of these businesses continue to change. Things are different, whether it's their family is changing or their store is changing. So two years later, in 2025, as of today, my wife and my daughter have recently opened up their second store and now they do bridal showers and they do different events, and so the company is expanding and with that, as you would expect, their needs and how they operate is changing.
So now they have two stores. So having them each run one of the stores is just not possible. The new store is open 70 hours a week versus 16 hours a week from the old store. So now they're selling more. They have more of a need for more inventory. So they're trying to keep up with the new pace and the new demand, which is all great news. But the real question here is how much does their bank know about this going on with this business?
And the reality is next to zero. My wife has her business account at a large regional bank in our area, and she logs in to digital banking four or five times a week and spends about 30 seconds total of being on their digital banking site, because she's only checking balances of that account.
And where does she spend all of her time? She spends all of her time—or a lot of her time to the tune of 5, 6, 7 hours a week—in Square, because Square has all of the information about her business, has all of the information about what her incoming receivables are, about her cash flow, even to the point where Square really understands her business and where it's at. And now they're making offers for loans to help her with the inventory.
And she came to me one day and said, "Hey, got great news. Square has offered us a loan for 0% interest." Like, “Huh, I'd like to see that contract. Let me take a look at that." And really what it was, it was a different way of offering lending to a small business because they basically charged up for a fee. So it was $500 as an application fee, and then they said, "We'll give you so much money for that."
And I had her go through the equation of, "Well, how long ..." They were collecting 15% on her receivables and paying back the loan over time. And I said, "Well, how long do you think it will take for you to pay off that loan?" She says, "It's going to take about six months." I said, "We'll take the rate, what you paid in the fees, put that over the amount you're getting, and now multiply that by two." And it comes out to, it's a 23% interest loan.
Really, they just packaged it a different way. And the opportunity that's in the market for businesses like this, and there's all kinds of these kinds of businesses, bigger, smaller, that are growing and changing over time, and many of the financial institutions don't know that that's going on. You talk to a financial institution and say, "Hey, how are you looking at businesses that are growing?" And they say, "We don't know this. They're not telling us this."
But they're telling Square that. They're telling that through the transaction patterns and their behavioral patterns of what's going on in the business. And so I always get from the bank, "Well, we don't know about their emerging needs," and I asked the question, "But what about if you did what know what their emerging needs?" Well, then you get the next objection that says, "Well, if I know what they need, but it doesn't mean I can offer those solutions that they're looking for."
And I say, "What if you could?" And then you keep going down the line about how do we really understand what's going on with these businesses? And then proactively reach out to them and say, "Hey, we can help you with what you're going through as a business owner." And that's really what I want to talk about today.
For those that don't know me, I'm Dean Jenkins, I'm a digital strategist at Q2, and we look at the market. We talked to a lot of industry experts in different studies, and this is one from, I believe, from McKinsey that went out and polled small business owners and asked them how likely they were to switch financial institutions for a better digital experience. And when you talk about a better digital experience, it means it needs to align with what they expect and what they need, and they would be willing to switch if they could get that.
And that number came out to 37%. And there's other studies that suggest about one-third, as much as one-third of small business owners would be willing to switch financial institutions for tailored solutions that meet their business need. And if that's true at 37% or 33%, but in that vicinity, if that's true, that puts about $700 billion in deposits in play in the next 12 to 24 months.
And so there's a huge opportunity here for all finance institutions to figure out, "Hey, how do we compete and win in the small business market and get after that $700 billion in potential deposit switch?" And we're going to talk about that. I've got a great panel of bankers and experts about small business that are going to join me today and talk about the opportunities and talk about what's going on in the industry.
And then we're going to play a little game of that I call what if. And I'm going to show you some stuff, what if you could do these things? What if you could digitize this whole end-to-end journey for small, medium-sized businesses? But before we go there, let's meet the panel, and panel, you want to tell us a little bit about yourself, your role, and your financial institution or company? So Diedre, you want to start?
Diedre Barret
Yeah. I'm Diedre Barrett with Guaranty Bank and Trust in Mississippi, and I'm the chief experience officer, a fun part of the bank, and get to touch a little bit from retail to commercial, drive culture. That's probably my most favorite thing.
Dean Jenkins
Awesome. Kevin?
Kevin Miyamota
Hey, everyone. My name's Kevin Miyamoto. I'm one of the founders of a company called Identifee. We're an AI platform built for banks and credit unions that really performs a task in multiple systems, like a CRM, business intelligence, workflow, all in one seamless, AI-powered platform. So happy to be here.
Dean Jenkins
Ryan?
Ryan Hill
Hey, good afternoon. I'm Ryan Hill. I'm the director for product management treasury services at Trustmark Bank. Trustmark's about an $18 billion bank based in Jackson, Mississippi, headquartered in Jackson, Mississippi, with about a five-state footprint around the Southeast through the Florida Panhandle.
Dean Jenkins
Awesome. Well, great. So Deidre, let's start with, as we start talking about this and the opportunity to do some of this stuff through the digital channel, what are some of the roadblocks or challenges that you have in getting adoption with small businesses in digital?
Diedre Barret
Well, Dean, I think that's a really interesting and timely question for myself personally, it's the boomers. I think—I've done a little research—and about 50% of the businesses in the U.S. are owned by boomers, and a large portion of them are 70 and older, and they're just less likely to embrace the technology.
I think they have a lot of legacy systems in place, and I don't think it's that they are opposed to the digital channels, I just think that they're so into their day-to-day and what they do that they don't take the time for it. And I have a personal story if you'd like for me to share it.
Dean Jenkins
Absolutely.
Diedre Barret
My brother has a small business. It's a really cool niche business. He actually paints turf fields and makes the stencils. He's done the Super Bowl for about 25 years. He's in Mississippi, and he's much older than I am.
And I go to him every now and then, and I'm just like, "Tell me about your business. Tell me about ... What are you using electronically? How are you paying your employees? And what about when you're invoicing the Denver Broncos? What's that turnaround look like for you? How does it affect your cash flow?" And he's like, "What are you talking about? I don't do any of that."
And I'm like, "Wait, why? Tell me." He's like, "I don't have time for that. That just doesn't make sense. I don't have time." I was like, "So you're writing checks and you're just sending out ..." "Well, yeah, what else do you want me to do?" So that was such a reality to me to just see that there's such a huge opportunity.
If we could identify in our banks, who are those that are business owners that may be 70 plus that are still owning their business, get in front of them, go with empathy, go with curiosity to find out what their succession plans are, to be able to get in front of that and those next successors. I just think that's huge for us. But I think it's an age. I think it's the boomers, in a lot of business.
Dean Jenkins
I think it is super interesting that we think about, hey, we're having trouble getting adoption of these small business owners because they're set in their ways, and they do things a certain way. But as they age and they look to pass it on to the Lilys of the world or eventually that things could change. And Kevin, I know you have some perspective on this, so that about, hey, how big of an opportunity does that create for financial institutions where they do have an aging demographic and as they have their kids now taking over?
Kevin Miyamota
Well, yeah, it's huge. And I'm going to ramble, so I promise this will make sense, but show of hands, how many people here are losing business to Square, Stripe, PayPal, Venmo? It should be everyone because financial institutions are getting crushed right now. And the challenge that I see for banks and credit unions is that, unfortunately, you have to serve folks who just graduated college all the way up to the boomers.
And so that's a challenge, because you really have to service and support tons of different ages across your financial institution. At the same time that's happening, you have fintechs and vertical SaaS providers that have embedded payments that are going after one specific market and making it super easy to run their business and do everything. And by the way, also process payments.
And so for me, it's a tough battle, but I do know that if you're a community financial institution or if you're any bank, really, or credit union and you decide you're not going to invest because you don't have a younger customer base, you're going to be toast. It's going to be too late soon. And so it's one of those where even though you might not have it today, if you don't build for it soon, unfortunately, I think you're going to be left out.
Diedre Barret
Yeah, no doubt.
Dean Jenkins
Yeah, I think the time is right where it may be still a bit of a struggle to start getting the current customer bases to have the full adoption, but it is coming to your point. And Ryan, I know we've talked about this, how important is it to the financial institution that you do start understanding your business customer needs?
Ryan Hill
It's huge. I would say that for years, one of the things that the fintechs have done better than most financial institutions is defining use cases and specializing in things that are of direct value to small businesses. I think banks in general, as the fintech boom started, were really afraid of becoming what I'll call a set of dumb pipes.
We didn't want to just be a place where transactions were settled, didn't want to just be a place where we saw entries that were coming and going, but the real business transaction, you're blind to it. So it's huge for us to try to recapture that value proposition for small businesses to have some insight into what's important to the businesses, being able to understand what products and services they're really using in order for us to have a chance at some of that $700 billion, if you will.
Dean Jenkins
I think it's a great point. It is super important. If you really want to compete and win in the market, you have to demonstrate that you understand the needs of these businesses. And those needs can be unique as you move from one business to another. They're not all generic and everybody needs exactly the same thing. They're in different stages of their life cycle as a business. Their business needs are changing.
And so Deidre, I know we talked a little bit about this around the importance of data to help us identify, because there's a couple of different ways of getting out there to understand the needs of these businesses. One is in person, that's probably an impractical model given that we have 15-plus million of these businesses in the US. So how well are financial institutions leveraging data at this point?
Diedre Barret
Are we doing that?
Dean Jenkins
Well, I think I've seen it in the brochure, yes.
Diedre Barret
It's amazing to me that we have so much data in the banks. I mean, we have more data than probably anybody else does. And I think we just fail miserably in utilizing what we have and being able to take what we know or be proactive, knowing what's going to happen, and turn it into marketing campaigns, turning into be giving it to our sales team to be able to go and target very specific areas and understand and know that relationship. It's crucial for us.
Dean Jenkins
I mean without that, you're flying blind in what the market expects and where your pockets of opportunity are. And Kevin, I know you guys have a CRM platform. How does a CRM integrate with that data and help that process, both from a digital perspective and even an in-person sales perspective?
Kevin Miyamota
Well, I'll say if it's too hard to use, it doesn't help at all, because no one actually likes putting information in a CRM. But actually, let me take a step back and let me use your daughter's store as an example again, because when from one store to three stores, business is growing, that is a prime small business that we should all be going after. And Square had enough information, even though it's not as much as a bank would have, but enough information to make a personalized recommendation for a loan.
Now, it was a crappy loan. She's not going to take it, but still, it was a personalized offer. And I would bet if you're sitting on all of this data, you probably have more data you could use. She might not share the information with Square. I bet you she certainly posts to Instagram and gives updates on Instagram.
So it’s how do we take information from social? How do we take information from blog posts, website updates, and data to formulate, hey, it looks like this is a really good opportunity for me to go after? Let's go ahead and target it, and then how do we track it on the backside of it in an automated way? Because let's be honest, and again, show of hands, who's in sales here? Megan, do you like putting notes in your CRM? OK. No, no one does. I get it.
But I'm just saying if there are ways to automate that, that's what's important, because as a sales leader, you're making a lot of decisions off of the data, but crappy data in, crappy data out. And so there's a lot of things at play, but it doesn't have to just be the bank data you're sitting on. There's a lot of different things that you can incorporate while making a decision whether or not this is a good opportunity or not.
Dean Jenkins
And coming back to what if you don't do this, and so, Ryan, I'll ask you that question, but what if the banks don't start embracing data and don't start understanding needs? What are the downside risks of financial institutions that … ?
Ryan Hill
Yeah, I think you'll see a continued trend of attrition, if you will, from banks to using fintech providers directly, because they've proven to be a little bit better and have, I guess, a delivery model that tends to be a little simpler than what banks can offer. So, there's a huge risk there. If you have a lot of small businesses in your footprint and have a lot of small business opportunity that if you're not paying attention to that audience and proving to them that you understand what's important, you do so at your own peril.
Dean Jenkins
Those are great comments. And it leads into the what if game, which is what if you did understand your business needs? What if you did have a set of solutions that went beyond traditional banking? What if you were able to go after these opportunities in the small business segment effectively and economically?
That's one of the other things I hear is, hey, the good news is that these smaller businesses are actually interested in cash management services, in ACH, electronic payments, in fraud controls or positive pay. The challenge is that if you use only an in-person model, the costs and the efficiency are difficult to manage. And so that's where digital comes in. The next section I just want to talk about, well, what if it could look like this?
What if you were able to take your data, convert it from detailed data and convert that into a characteristic that said, "Hey, this is likely what the business need is based on these characteristics." And what we refer to that is an audience. And so that means that I'm going to take data and attributes and anybody that's been with Q2 for a while, you have heard the term “traits.” That's basically an attribute.
We're taking raw data and converting that into an attribute that allows you to build an audience of common or businesses that have roughly the same need. So as an example, we don't need to know that your balance tip is $32,493.23. What we need to know, and what is a better characteristic is that your average balance tends to be over $25,000, and it starts building a picture of where is this business in their life cycle and where are their opportunities?
And so what if we gave you tools like Audience Builder that says, "Hey, let's build this audience and then go after that particular audience." And that can be based on their current financial position. It can be based on the type of business they are. It can be based on a number of factors. And this starts getting really, really interesting when you start talking about fintech data that they have.
So we have some of our fintech partners that are providing things like cashflow forecasting for small business. It's a company called Monet. They're here, they're out in one of the halls if you haven't talked to them. They have a really good picture of, hey, how can we help businesses manage their cashflow? What if you got data from that? That data you probably don't have today that Square had because it was their point of sale system.
What about if you had that data because you now had the receivables? And they were putting that into a cash into their QuickBooks or Quicken or whatever it is, and now you pulled that in and you started having it as part of your cashflow, and you get that data that now can be fed into Audience Builder as one of the criteria that you're looking for so that you can then align products back to those audience needs. What if you can then use digital to market directly to those businesses?
So Q2 Discover allows you to have target audiences and then you can provide their small businesses additional information about those products in the context of when they're on online banking. So it's not just, hey, it's the first page that they see them when they log in. That's an option, but it could be even more powerful if they go and they're looking at their transaction history as an example and they click on something that is a potential problem and you got a solution to that, you can connect the dots.
So when they click on something, it's like, "Oh, since you're here now I'm going to tell you about some great stuff that we have that probably applies to you" because what audience they're in and you have now have a tool that allows you to connect and have that conversation with them. When you talk to small business owners about, "Hey, why do you go to the big four banks?" The numbers are crazy: 57% of all small businesses go to the top four banks; 76% of millennial-owned businesses go to the top four banks. So it's not getting any better.
And then you ask them, "Well, why are you doing that?" And for years and years, branch location used to be the number one reason that a small business selected their financial institution. That has changed. Now it's based on digital. The challenge you have is they don't know that you have some capabilities that the big banks have. They don't know the capabilities, so they assume you don't.
They assume that because Jamie Dimon is putting in $14 billion a year or whatever his new number is into technology, he must have the best stuff. It may not be true. So a tool like this allows you to get out awareness and offers these solutions right to the customer at the right time that align with what their business needs are. From there, you have other tools that we are building and offering to allow them to take a leap from there to say, "I want to learn more about this product."
And so, and I'll talk about a couple of the additional products that we're adding into this, but at the end of the day, you want them to be able to see how this product is going to help them and then easily purchase it right online. And so we have a number of our financial institutions that are starting to package things up, because this is how they buy. They don't buy in a P times V model for electronic payments.
They buy like we do as consumers, albeit the DirecTV package of being $250 a month is probably a little much, but we all buy in subscription packages. What do I want to buy? And I'm going to pay one rate on a monthly basis. And that's how these small businesses think, as well. So giving them an easy way to say, "I want to buy that package," that you've already said this is the right package for you. So you've already prequalified in a sense of saying, "Hey, this is probably a fit for you." And then giving them an easy way to sign up for those and purchase those solutions.
And then what if as soon as they made that purchase, stuff started showing up in their experience, there was no lag? You think about the way that we go to market in the commercial banking market or middle market segment, we have a delay of getting everything set up. Well, if you automate some of this and you automate that package and then you have your back office, so we can do the quick setup, as soon as they purchase it, stuff starts showing up.
And that may be stuff like cash management solutions, positive pay, and ACH payments and some lightweight information reporting maybe, start showing up on their dashboard automatically. Nothing has to happen. They start seeing it and that's what they expect. As soon as they make a purchase, they expect, "I see it and now I can start using it." There's some scenarios, like those that know AutoBooks, who's here as well.
The scenario was that we launched AutoBooks at one of our banks. It had the first customer signed up for AutoBooks at 8:30 in the morning. They sent out an invoice at 8:40 and they collected the money at 8:50: a 20-minute cycle from purchase until I got my first payment. That kind of speed is nothing that we have seen in the market, but what if we could do that? What if we could say, "As soon as you buy stuff, it starts showing up." And again, it's not limited to your banking products. The fintechs are in this as well. And so the ability for us to preconfigure through something we call Experience Builder and have that flow right in as things change about that particular company, it starts showing up immediately in their experience.
And so we're really talking about how do we digitize the end-to-end service for the SMB journey? And so how do we help you identify? That's the whole data play, that's Audience Builder, that's the data exchange from other systems which help you target. So SMART, Discover many of you may have those two products already. They're ready to go. You can start using those today for getting the message out there.
And Experience Builder, which is how do you build the dashboard and the configuration that says, "Hey, this is what you'll see as you progress," and as you buy additional products, you get to lay that out in Experience Builder and say, "This is what I want it to look like for this particular business." And then subscribe.
So identify, target, subscribe. And so subscribe is some of the stuff that we had talked about. And some of this, we're re-engineering a bit to fit the small business market, like Interactive Test Drive. If anybody knows what that is, that means you can set up users that can now see what it would be like to use this package of solutions that they're interested in. And it works today in the commercial banking market, but it's more of an in-person salesperson that is actually setting that up. And we're going to automate that for small business.
And so electronic forms, automated setup in your back office, these are things that we're making investments in to make this whole end-to-end journey work the way we'd want it to work and improve the efficiency for both you and the small businesses. So with that what if we could do this, I'm going to turn it back to the panel and get your reaction as to what do you think about this? I'm going to start with Ryan. And Ryan, what do you think?
Ryan Hill
This would be a take my money scenario for us.
Dean Jenkins
We have salespeople in the audience, ready to go.
Ryan Hill
That's right, where’s the contract at? There were some commonalities in a couple of the sessions this morning that were more geared toward large corporates and then now we're talking about smaller businesses, but they have some commonality in what they expect. And one of those is, I think you used the term tailored experience in the beginning. So, the messaging associated with what products and services you can provide is going to be different with those two segments.
But what the commonality again is how are we proving to those clients that we understand their business, that we understand what they need? So sometimes it's the timing of the messaging. It's in the example you gave earlier with your daughter's business; Square noticed that there was a growth situation there, and they saw an opportunity where cash flow might be an issue, maybe the offer wasn't the best offer. But it got her attention because it was tailored to something she was dealing with right there in the moment, so that's an important piece of it.
And then how you message, you may not be able to go out to a small business and talk to them about integrated receivables, but if you can tell them, "Hey, we can help you collect your money faster and reduce the amount of time you have to spend on tracking down exceptions that aren't easily applied," that's messaging that can cross generations and something that they can find value in. And it starts with being able to utilize the data we have to see those opportunities so you can tailor the messaging to the client.
Dean Jenkins
A perfect explanation of the potential benefit. Deidre, what is your reaction as a customer experience leader? What is your reaction to what if we could do this and digitize the end-to-end journey?
Diedre Barret
We would truly take our digital channels and turn it into a concierge banking. I mean, that's my first thought. We always talk about that we want to be the boutique bank. And so this takes you there. It really takes you to create that experience with the small businesses that they're used to ... that they think. They don't know that we're $3 billion in asset and so don't think that we have the same resources, but being able to utilize the fintechs and pull all that in together and then truly identifying and personalizing and customizing their needs would be amazing. Really, really very cool.
Dean Jenkins
I think the concierge concept I hear a lot, which is great. There are certain client bases you want to align with them and serve them as best you can. One of the things that I hear is, "Well, that requires that it's an in-person concierge." My view is that you do in-person and you can do digital to reinforce it. Because they're going to constantly use that. And if you're reminding them, "Hey, we're thinking about you and we understand your business and you're important to us," and somebody, a branch or a relationship manager also has that information, has the same conversation, it can be really powerful.
And Kevin, that's one thing we've been talking about is it's not just digital. It's maybe a digital first approach, but then we also want to feed these insights into a CRM.
Kevin Miyamota
Yeah, I mean 100%. It's about how do we capture everything that's happening in digital in general with online banking and feed it in a way that's actually usable. Because right now there's a lot of data points, but it's hard to make meaning of the data and actually put action to it.
So how cool would it be if you had a CRM that automatically tracked all the campaigns that Q2 is running and then all the clicks on the campaigns and be able to alert users like, "Hey, it looked like Dean clicked on this campaign," and log it to a CRM or to a pipeline opportunity automatically and track all the pipeline and all wrapped in AI. So there's a lot of things that if you had a CRM that could do it, I think there'd be just tremendous value in that.
Ryan Hill
And there's a distinction between digital first and digital only. So we're not trying to take the human component out of it, but there's a way or a path here where you can utilize the data we have, to Kevin's point, have that data organized, make that data actionable. And so now your human interactions can become hyper-efficient, and you can arrive at a visit with a client and you've already analyzed that data, you know what they need. You can spend the majority of that time talking about solutions versus fact finding for the first 30 minutes of that interaction. So again …
Diedre Barret
It's a great point.
Ryan Hill
.... it's not going to eliminate the human element, but it can certainly make it more effective.
Kevin Miyamota
And again, and I actually think in the very near future, if you haven't been following AI, it's getting really freaking good. And in the next five years, certainly almost all of your routine tasks that you all do today will be automated. And actually, the only thing that will matter are those personal relationships. That will be the only thing to separate everyone, so it'll never replace that. AI cannot replace the relationship component.
Cheryl Brown
That’s it for today’s episode. Tune in for future episodes with the great content from CONNECT 25, and give us feedback about the topics you’d like us to focus on by taking the quick survey at q2.com/podsurvey. Subscribe to the show wherever you listen to podcasts, including YouTube, Apple, and Spotify, and you can see our archive of podcasts at hub.q2.com/podcasts. Until next time, this is Cheryl Brown, and you’ve been listening to The Purposeful Banker.