Bankers have long griped about how unwieldy today’s millennial consumers are: Nothing seems to please them, so why bother with all those digital toys that don’t generate any income?

Thank goodness banks, especially smaller banks, can rely on their “bread and butter” of small and midsized business (SMB) clients for the bulk of revenue and AUM.

Well, maybe not …

According to the FIS 2017 Performance Against Customer Expectations (PACE) Report, small and midsized business owners and leaders are adopting digital banking at a much faster clip than everyday consumers—and they’re now very willing to switch banks to get the mobile capabilities they want.

The annual PACE Report, which surveyed more than 500 U.S. businesses about their banking preferences, portends what could be a gigantic shakeup in business banking, as one-third of SMBs are actively seeking recommendations from peers for switching banks.

Gen MX Is Now in Charge

Chief among the findings is that the SMB market is heavily influenced by the new super segment of consumers that FIS has termed Gen MX – the collective of senior millennials (ages 26-36) and Generation X (27-51) who are now the wealthiest, most-active banking customers in the U.S..

This “digital bridge” between consumers and SMBs is obvious because: 1) Gen MX members account for nearly two-thirds of the U.S. workforce and are now the founders of nearly half of all small and mid-sized businesses (5 million total); 2) if not the business owners, they absolutely are key decision makers for most of the other 5 million SMBs out there; and 3) Gen MX is also the target market of said SMBs, naturally.

So, what senior millennials and Gen Xers want, small and midsized businesses want—just much sooner.

It’s Not Just About Interest Rates

It’s no secret that SMBs have long been unhappy with being denied credit lines and loans, especially from big banks, in the wake of the financial crisis. Many sought funding from smaller banks better positioned to understand their needs or pursued alternative options like merchant cash advances.

But it’s not just the history of stingy lending that has SMBs ready to make a change. It’s also because their banks don’t offer the leading-edge products they want, with 48% of SMBs that switched in the past year or are considering switching citing a “lack of product or service offerings” as a key factor.

Small and mid-sized businesses (just like younger generations they serve) want better payment options. Payments are the life-blood of small businesses and they’re the primary—and most lasting—customer experience. SMBs want their payments, both coming to them from customers and going out to vendors and suppliers, to be simple, seamless, and most importantly fast.

Squaring Off Over P2P Payments

According to PACE data, there’s clearly a war on between the primary bank and outside services like Square and PayPal. So far, it’s a relative draw as 37% of all SMBs paid a vendor or supplier via an outside service’s mobile app in the past 30 days, slightly behind the 40% that reported using their bank’s app. These figures are substantially higher than what’s seen in the broad U.S. consumer PACE Report.

Not surprisingly, consumer-focused or B2C businesses were much more frequent users of mobile payments, with 46% of these SMBs using their bank’s app in the past month and 43% using an outside service’s app.

Mobile A Pain Point for Community Banks

The PACE Report found that SMBs are the least satisfied with the top 50 global banks, which have the least transparent pricing and fees, but are willing to put up with these annoyances to take advantage of their digital capabilities. These SMBs would be good conquest targets—if only competing banks had similar digital capabilities.

But in the case of community banks and credit unions, which garner high approval ratings for personal service, many are woefully behind the curve due to delaying or underfunding investments in mobile banking.

For example, mobile banking penetration is an astonishingly low 18% for community banks. That is lightyears behind the 64% penetration rate of regional banks and 76% penetration for the top 50 global banks and simply may be too far a gap to close.

For more insights on SMB banking, or to access consumer- and country-specific research, visit the FIS PACE website at