Why Financial Institutions Must Prioritize Seamless User Experiences for Small Businesses

User Experience in Financial Services

User experience has seen a transformation for individual consumers. The user experience is now expected to be faster, more personalized, and entirely digital. But small and medium-sized businesses (SMBs), which make up a significant portion of the global economy ( 44 percent of the US economic activity , to be exact), have been left behind, stuck navigating slow, cumbersome onboarding and credit processes. This gap between the consumer experience and the SMB experience has created a major obstacle, not just for SMBs, but for the financial institutions serving them.

As SMBs continue to grow, financial services must evolve to meet their needs.

The Growing Importance of SMBs in the Global Economy

SMBs are the backbone of the economy, contributing to employment, innovation, and economic growth. According to recent statistics, there are more than 30 million SMBs in the U.S. alone, accounting for 99.9 percent of all businesses and employing nearly half of the private workforce. Globally, SMBs represent more than 90% of businesses and contribute significantly to GDP in both developed and developing economies.

Despite their importance, SMBs face considerable challenges when it comes to accessing financial services. Research shows that 60 percent of SMBs report struggling with funding and cash flow , often due to cumbersome, outdated onboarding and underwriting processes. Unlike consumers, who can open a bank account or apply for a credit card in minutes, SMBs are left waiting for weeks, navigating complex compliance checks and manual paperwork.

This disconnect isn’t just an inconvenience, it limits the potential for SMBs to grow, thrive, and drive the economy forward. Financial institutions that don’t prioritize improving the SMB experience risk falling behind in a world where seamless, digital-first interactions have become the norm.

The Problem: A Slow, Fragmented SMB Onboarding Experience

While individual consumers have experienced rapid advances in digital banking and credit services, the same can’t be said for SMBs that face lengthy onboarding and underwriting processes. Common challenges include:

• Compliance Bottlenecks: Know Your Customer (KYC) and Know Your Business (KYB) requirements are essential for regulatory compliance, but they add layers of complexity to the onboarding process, slowing things down considerably.
• Manual Data Entry: SMBs are typically asked to provide extensive documentation, leading to slow response times and manual errors.
• Lack of Personalization: Many financial institutions treat small businesses like larger corporations, applying a one-size-fits-all approach that doesn’t account for the unique needs of SMBs.

The result is a fragmented user experience that leaves SMBs frustrated and waiting for weeks just to get access to loans or credit.

5 Strategies to Improve SMB User Experiences in Financial Services

To close this gap and create a more consumer-like experience for SMBs, financial institutions must prioritize a few key strategies. Here’s what needs to change:

Streamline Compliance and Regulatory Processes

Regulatory requirements like KYC and KYB are non-negotiable, but they don’t have to slow down the onboarding process. Financial institutions can adopt automated compliance checks that use real-time data verification to streamline approvals without compromising security. By reducing the need for manual review, banks can speed up onboarding, ensuring SMBs can access financial products faster.

Automate Data Collection and Verification

SMBs often have to provide a mountain of paperwork to prove their eligibility for credit or loans. Automation can simplify this process. Using machine learning and AI, financial institutions can collect and verify business information from multiple sources automatically, minimizing the amount of input required from SMBs and reducing errors.

Personalize Financial Products for SMBs

Not all SMBs are the same. A sole proprietor needs different financial services than a growing tech startup. Financial institutions must embrace data-driven personalization, using advanced algorithms to create tailored products and services that meet the specific needs of different SMBs. By offering customized solutions, banks can enhance the customer experience and build long-term loyalty.

Leverage AI and Machine Learning for Fast Underwriting Decisions

Speed is critical in today’s financial world, and that applies to small businesses just as much as consumers. AI and machine learning can analyze risk, creditworthiness, and compliance in real-time, allowing financial institutions to make fast underwriting decisions that don’t require lengthy manual reviews. This not only accelerates the process but ensures more accurate, data-driven decisions.

Build Trust Through Transparency and Communication

SMBs need transparency when it comes to their financial services. Financial institutions should prioritize clear communication at every step of the onboarding and underwriting process, providing SMBs with real-time updates on their applications and explaining how decisions are being made. This builds trust and improves the overall experience, as businesses feel more informed and engaged.

Insights from Industry Leaders: The Path Forward

At our luncheon in Vegas, key executives from major financial institutions and fintech companies came together to discuss the future of SMB onboarding and underwriting. Leaders from Equifax, Square, and Bank of America emphasized the urgent need for financial institutions to adopt faster, more efficient solutions.

Sal Hazday of Equifax noted,

The Future of SMB User Experience in Financial Services

The financial services industry is at a pivotal moment. As SMBs continue to grow and evolve, their need for fast, seamless financial solutions will only increase. Financial institutions that adapt and prioritize the consumerization of the SMB experience—through automation, AI, and personalization—will not only better serve their small business customers, but will also gain a competitive edge in an increasingly digital world. By focusing on improving user experience, financial institutions can unlock new opportunities for growth, strengthen relationships with SMBs, and drive innovation in a sector that has long been overdue for change. Read more from Suneera here .