By Owen McDonald, Managing Editor at Bottomline. Bottomline were winners of ‘Best Software as a Service – USA (Enterprise)’ at the 2025/26 Cloud Awards.

There’s optimism among the wide band of businesses known as “SMBs” with banks and their PSP partners getting more serious about digital banking and cloud payments for these players, with tailored solutions and expertise that deliver targeted results.

For too long, many banks have tried to serve small and midsize businesses (SMBs) with altered versions of consumer digital platforms. The login screens look similar. The basic tools mirror retail banking. The result is a UX and utility that may be convenient for the institution but rarely matches the complexity or urgency of real-life business.

It reflects a strategic gap in how banks view the small business segment. When institutions fail to recognize SMBs as a distinct, high-value market, they tend not to budget for the specialized capabilities needed. Those customers then feel underserved, don’t fully adopt fee-based services, and appear unprofitable. Leadership looks at the numbers and pulls back even further. The pattern repeats, then competitors step in, or costly DIY takes over.

In a recent interview, Bottomline’s Rodney Nilson called this a “self-fulfilling prophecy” for banks that don’t fully commit to SMBs as a channel. “If you do not, as a bank, make it a strategic, important segment to serve, then you are going to underserve it. You are going to be in a recursive cycle where you can’t monetize the SMB segment.”

In a world where small business owners now understand digital and are increasingly willing to switch institutions for access to better tools, a Laissez-faire approach can cost clients.

Nilson says, “If a bank can deliver a service to me that is of value to my business, I am willing to pay for it. I’m even willing to go to another provider to get it.” Those services span fraud protection, accounting integration, cash flow forecasting, and payment controls. Clearly, FIs need a markedly different philosophy for digital banking and payments.

The Cost of Treating SMBs Like Consumers

Consumer digital banking has matured around predictable, relatively simple use cases. As a business customer, that model breaks down. Even a modestly sized firm may be managing payroll, paying suppliers on different terms, handling sales tax obligations, and servicing business credit. The owner may need to delegate payment authority to an accountant or staffer. Fraud risk rises. That’s when SMB relationships are vulnerable.

Studies repeatedly show that businesses are willing to change relationships if another provider can offer meaningful gains in efficiency, control, and cash insight. Nilson has heard it directly in focus groups. “There has always been a pervasive notion that if a bank can deliver a service to me that is a value for my business, I’m willing to pay for it,” he said.

“If you can give me a way to help manage fraud a little better, if you can provide me a way to lessen my accounting burden by integrating well with my accounting package, if you can help me forecast my cash position, for those tools, I might give you my business.”

Designing Digital Experiences for Real Business Needs

The challenge of meeting needs is complicated by the diversity of SMBs. A group of three urban coffee shops and a construction contractor generating tens of millions of dollars in revenue might both be labeled ‘SMBs.’ Their operational realities, staffing models, and payment patterns are completely different. Neither belongs on a retail platform, but they also cannot be forced into a single, rigid business banking template.

Nilson argued that banks need to embrace what he called “mass customization.” In his view, the right digital platform should allow institutions to define a spectrum of business personas and then configure experiences to match without building stacks for each.

With the right platform, new capabilities can be layered on as a business grows more sophisticated. Nilson highlighted the importance of avoiding situations where a customer outgrows their bank. The ideal path is one where “I start a relationship with a small business, and I enable relationship growth as the business grows,” he said. “We want our banks to be relevant and top of mind for the entirety of that business life cycle.”

It’s a philosophy with direct implications for B2B payments. As businesses scale, they demand more control over settlement, richer remittance data, more nuanced entitlements, and stronger fraud controls. Those capabilities should not require a platform migration. Instead, they should emerge naturally as the business moves from a simpler form to a more advanced one within the same digital environment.

When well-executed, that model turns digital banking from a static portal into a growth platform that aligns the bank’s economics with customer success.

What’s an SMB?

The difference between large corporate clients and SMBs is not only size. It’s also the structure and maturity of their back offices. A firm with $10 or $15 million in annual revenue may have only a handful of people juggling finance, operations, and customer service. They rely heavily on cloud-based accounting and invoicing tools. They often feel, as Nilson put it, “like they’re riding in a rodeo, just hanging on, trying to make things work.”

That reality creates a significant opportunity for banks and credit unions. Instead of viewing digital banking as simply a channel for balances and payments, institutions can turn it into an operational hub that consolidates data and workflows. That’s appealing to busy firms.

“If a bank can provide the one place I can go to understand and administer my business, that simplifying dynamic would be a massive win for the business and a massive win for the relationship,” Nilson said. By ingesting data from external systems and presenting it alongside balances, upcoming payables, expected receivables, and available credit, the bank provides the control tower for daily operations.

This approach is attractive for community banks, credit unions, and regional banks. They may not be able to match national and global competitors on brand, but they can deliver a digital experience tailored to SMBs lacking back-office resources. Embedding cash flow insights and workflows into digital banking can make banks and PSPs crucial to SMBs.

Choosing Cloud Partners with Real Domain Expertise

Delivering all of this at scale requires modern technology. It demands a cloud view.

Nilson believes that “just about every bank at this point is looking for cloud service providers.” But choosing a partner is not simply a matter of uptime and scalability. Domain expertise is a better metric.

Digital banking for SMBs sits at the intersection of shifting expectations, new payment infrastructures, regulatory changes, and brisk innovation. “All these things are constantly driving us to change,” Nilson added, saying the real value is a provider that pairs strong technology with deep subject matter smarts.

“The technology is super important because that is what is going to scale. That is what is going to give you uptime. That is what is going to give you a platform to innovate with,” Nilson said. “But if you don’t have domain expertise, don’t bet on ChatGPT to develop a roadmap that understands the trends, market nuances, and regulatory dynamics.”

For banks, this means partnership evaluations need to look beyond features and price. Performance, security, and architecture matter, but so does the “team behind the software.”

Nilson emphasized that when a bank chooses a digital banking partner, “that is minimally a five-year relationship, if not a ten-year relationship.” The cost and complexity of replacement make it essential to select a provider with proven staying power, a track record of innovation, and a roadmap grounded in commercial banking ability.