- Key insight: Small business customers want their banks to provide business management tools alongside traditional banking products.
- What's at stake: U.S. Bank believes the multiple product rollouts it's conducted this year can lead to deeper penetration in the massive small business sector.
- Looking forward: After the Minneapolis-based bank unveiled spending, payroll and bill pay products, an accounts receivable function may be up next.
U.S. Bancorp's recent rollout of payroll and accounts payable tools is part of a broader strategy aimed at establishing stickier, more enduring relationships with small business customers who are predisposed to regard their bank as a preferred source for back-office solutions.
The Minneapolis-based superregional bank's Payroll and Bill Pay for Business products, unveiled on Sept. 4, follow on the heels of a
The small business sector, which consists of more than 33 million firms, has always been a vital source of deposits and business development prospects for banks, including U.S. Bancorp, which counts more than 1.4 million small companies as clients. Entrepreneurs look to banks for credit, but they're also eager to deepen the relationship and bring their financial services provider into their back offices, according to Patel, who joined U.S. Bancorp in September 2023.
"We constantly hear small businesses really looking to their banks to provide integrated experiences," Patel said. "It's really our aim to provide a one-stop hub where small businesses can manage their finances."
Patel's comments mirror the conclusions of an August 2024 survey U.S. Bancorp conducted. According to the poll, entrepreneurs overwhelmingly prefer financial services providers that can bundle business management tools along with more traditional banking products, like checking accounts and merchant services options. Those findings prompted the development of the Spend Management platform in April, and now the payroll and bill pay features.
The $686 billion-asset U.S. Bancorp is the holding company for U.S. Bank. It created U.S. Bank Payroll in partnership with San Francisco-based fintech Gusto. Bill Pay for Business was designed alongside Fiserv and Melio, a New York-based fintech that specializes in payments.
"It makes perfect sense to find some of these innovative companies who are very much focused on improving customer experience, or creating frictionless platforms," Patel said.
For their part, entrepreneurs want to be able to focus on growing their companies, so they're eager to find a partner — preferably their bank — to help with day-to-day management chores, said Matt Wilcox, Fiserv's president of digital payments and deputy head of the financial institutions group.
"They go to their banks for their checking accounts," Wilcox told American Banker. "They go to their banks for lines of credit. They'd much prefer utilizing their financial institution beyond that."
That preference explains U.S. Bank's strategy in embedding Gusto's payroll technology into the U.S. Bank platform, and in offering Billpay for Business, which lets customers sync their vendors and bills to their operating accounts. The service alerts them when a payment is due and lets them know if they have the funds to cover it.
And though she didn't lay out a development timeline, Patel said an accounts receivable product is an obvious next step for U.S. Bancorp. "We're now going to focus on getting paid," she said.
The combination of tools for small businesses provides what Wilcox referred to as a dashboard, giving owners real-time information on the financial health of their businesses. "Passing on that data, we think, will be incredibly valuable," Wilcox said. "Our research indicated they were spending way too much time with way too many providers just trying to manage" their operations.
Ultimately, U.S. Bancorp embarked on its course of new product development to meet the needs of the small business community, though Patel said she will be more than happy if it also results in stronger client relationships.
"Selfishlly speaking, we want depth, primacy and engagement with customers," she said. "The more we can engage them across a spectrum of products and services to drive stickiness to the relationship, it absolutely is top-of-mind."
