January 28, 2025 — One-third of middle market companies and almost 1 in 5 small businesses are exploring alternative banking options with nonbank lenders like fintechs and private lenders.

The rise of fintechs has given U.S. companies an expanding range of options to traditional banking providers as they use technology to digitize and speed up the credit process and to deliver a more appealing customer experience overall.

“Fintech start-ups are free to innovate because they are not weighed down by legacy technology systems like commercial banks and face fewer regulatory requirements,” says Chris McDonnell, Head of Commercial and Digital Banking Analytics at Crisil Coalition Greenwich. “The result for companies is often a smoother process and faster payments.”

Traditional Banks Lagging in Digital
More than 80% of mid-sized companies and more than two-thirds of small businesses use their banks’ digital channels at least several times per week, according to data from the latest Greenwich Market Pulse.

The bad news for banks is that companies’ ratings of the digital experience delivered by traditional banks has been declining for the past three years. In 2021, 62% of small businesses and 59% of mid-sized companies gave positive ratings to their banks’ overall digital experience. Today, only about half of these companies award their banks positive ratings. 

The same trend is evident in bank credit processes. In 2021, two-thirds of commercial banking clients gave their banks high marks for their work in digitizing the credit process. By 2024, that share had dropped to just 52%.

In light of the huge investments commercial banks have poured into their digital platforms, these declines seem puzzling, but business owners and executives are comparing bank digital capabilities to their experience with other companies, including Amazon, Apple and Uber, as well as fintechs in areas such as payments.

“It’s an issue of perception,” says Chris McDonnell. “To fend off competition from fintechs, commercial banks will have to accelerate the upgrading of their digital platforms to keep pace with rapidly rising expectations among business owners and executives.”