Middle Market Emerges as Underserved Opportunity for Financial Services
The financial services industry tends to think at opposite ends of the spectrum when it comes to business customers. Solutions providers, banks and credit card companies tend to pay a lot of attention to small business, as they do during the current Small Business Week (April 28 – May 3). And they also dedicate entire divisions to servicing […]
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The financial services industry tends to think at opposite ends of the spectrum when it comes to business customers. Solutions providers, banks and credit card companies tend to pay a lot of attention to small business, as they do during the current Small Business Week (April 28 – May 3). And they also dedicate entire divisions to servicing large enterprises. But there’s a big hole in the middle, and this is where business-to-business (B2B) payments has untapped opportunity.
It’s a situation that has not gone unnoticed at B2B payments provider Previse. As Paul Christensen, founder and CEO of Previse, told Karen Webster recently for the PYMNTS series “After Thoughts,” his take on the business dynamics of Q1 tell him that the middle market needs some long overdue attention.
“The large banks and the card networks, they are waking up to the fact that the middle market is a massive market — and one that’s not particularly well-served by the finance industry with real pain points to solve,” he added.
Part of the reason the middle market has struggled to get the attention its Fortune 500 and Fortune 1000 peers receive is the fact that middle-market businesses are often too large for small business solutions, yet too small for enterprise-level capabilities.
While this presents a tantalizing opportunity for service providers, as Christensen noted, the conversation surrounding middle-market companies remains somewhat centered around buzzwords and high-level aspirations, rather than concrete solutions.
“The conversations we’re seeing [around the middle market] are more a recognition of the opportunity, and it is a massive opportunity, but it will take time to translate that recognition into delivering services that meet their needs,” he said.
But as focus increasingly shifts to the segment, that reality is changing.
Middle-Market Conundrum
When targeting the middle-market business segment, the importance of understanding the pain points, ranging from friction in payments to working capital challenges, are hard to overstate.
As Christensen explained, the gap between recognition and action underscores the need for a more nuanced approach to serving middle-market clients, one that transcends mere acknowledgment of the opportunity and embraces the necessary follow-through to address them effectively.
“What is missing is the right technology and approach to go after those firms,” he said, emphasizing that a key aspect of addressing middle-market needs lies in bridging the technology gap between monolithic enterprise-level solutions and the more nimble, almost consumer-like offerings geared toward small and medium-sized businesses (SMBs).
More and more, the absence of tailored technology solutions for middle-market firms is leaving them underserved in a fast-moving and transformative digital landscape.
The challenge in serving these businesses extends beyond technological innovation to encompass organizational agility and responsiveness, particularly within large incumbent institutions that often grapple with inertia and bureaucracy, hindering their ability to swiftly meet client needs.
“A ginormous oil tanker of a business will have challenges servicing a middle-market firm … the largest banks have strengths — big balance sheet, highly regulated, super safe — but being nimble is not necessarily one of those strengths,” Christensen said.
“Are these incredible opportunities that everyone’s starting to identify in the middle market end up being met by the top five banks or the top 20 banks, or will they be met by a bunch of FinTechs, or startups in garages that haven’t even been created yet?” he said.
Leveraging Technology, Data and AI
Touching on Christensen’s second theme of artificial intelligence (AI), he noted that from initial apprehension and fear to practical applications and accessibility, AI has undergone a recent transformation when it comes to the education firms have around its capabilities, and their willingness to embrace AI solutions.
Christensen said there has been shift from viewing AI as a distant, abstract concept to recognizing its tangible use in everyday workflows.
And with AI becoming democratized and accessible, businesses are exploring applications beyond basic administrative tasks. From risk assessment in B2B payments to enhancing workflow efficiencies, AI holds the promise of unlocking new possibilities across industries, Christensen said, noting that AI tools can enable human employees to focus on higher-value tasks and creative problem-solving.
In an era defined by rapid change and disruption, adaptability and foresight will be the hallmarks of success in the business landscape of tomorrow, he said.
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