Introduction
The way midsized businesses in the U.S. manage their banking relationships is changing. Once reliant on single banks for all their financial needs, these businesses are now adopting a more diversified approach known as “polybanking.” According to a recent survey conducted by data insights platform Codat, 68% of midsized businesses now work with more banks than they did three to five years ago. This shift signals a significant transformation in how businesses perceive banking, with technology playing a key role in decision-making.
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Why Is This News Relevant?
The shift towards polybanking is not just a trend—it’s a reflection of the evolving financial landscape. With businesses earning between $10 million and $1 billion now actively engaging multiple banks, the midmarket banking sector is becoming increasingly competitive. The survey highlights that 50% of these businesses work with three or more banks, indicating a growing demand for more tailored and tech-driven financial solutions. This diversification is driven by factors such as better digital services, increased access to financial products, and the rise of alternative providers like fintechs and neobanks.
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Industry Comments
Bank of America and JP Morgan Chase remain dominant players in the midmarket banking space, but their competitive edge isn’t solely based on reputation or customer service—it’s their technology. One-third of finance leaders cited advanced online features as their top priority when selecting a banking partner.
Joey Rault, Chief Revenue Officer at Codat, explains: “Half of mid-market companies work with three or more banks, with many also engaging lenders, fintechs, or neobanks. Banks aren’t just competing with their clients’ existing financial partners—they’re also fending off new challengers constantly vying for a foothold. To secure primacy in the mid-market, they must offer not only comprehensive financial solutions but also deeply personalized service that strengthens loyalty and sets them apart.”
This shift isn’t just about businesses seeking convenience—it’s about leveraging technology for smarter financial management. More than a third (37%) of mid-sized businesses are now partnering with fintechs or neobanks to address gaps left by traditional banks. Additionally, the willingness to share financial data has increased, with 53% of businesses open to granting banks continuous access, provided security measures are in place. This trust creates an opportunity for traditional banks to reinforce relationships and adapt to changing expectations before fintech competitors gain a larger foothold.
FAQs
1. What is polybanking?
Polybanking refers to the practice of businesses using multiple banking partners rather than relying on a single institution for their financial needs.
2. Why are businesses moving away from single-bank relationships?
Midsized businesses are diversifying their banking relationships to access better digital services, improved financial products, and increased flexibility. The competition among banks and fintech companies has led businesses to seek providers that offer the best combination of service, security, and technological advancements.
3. Which banks remain dominant despite this shift?
Bank of America and JP Morgan Chase are still the primary banking partners for most businesses. However, their dominance is being challenged by fintechs and neobanks offering specialized services.
4. How important is technology in banking relationships today?
Technology is a major differentiator. One-third of finance leaders cite advanced online features as their top priority when choosing a bank. Businesses expect seamless digital experiences, real-time insights, and integrations with their existing financial tools.
5. What role do fintechs and neobanks play in this trend?
Fintechs and neobanks are filling gaps left by traditional banks, offering faster, more tailored financial solutions. Many businesses are turning to them for specialized lending, payments, and data-driven insights.
Conclusion
The era of single-bank relationships is fading as midsized businesses embrace polybanking to meet their evolving financial needs. With competition intensifying, banks must differentiate themselves through technology, personalized services, and trust-building initiatives. Fintechs and neobanks are rapidly gaining traction, making it imperative for traditional banks to innovate and enhance their offerings. As businesses continue to prioritize digital solutions and flexibility, the future of banking will be defined by how well institutions can adapt to this new reality.
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