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Why Financial Service Providers Need to Tap into the Middle Market

Boaz Gam

Boaz Gam


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Article content
  1. The Mid-Market Gap: Why Is There a Lack of Niche Financial Services?
  2. How Can Fintechs Target the Mid-Market Segment Better?
  3. Who Will Make the Most Out of Mid-Market Opportunities?

Key Opportunities Mid-Market Companies Offer Fintechs

In many cases, the financial industry tends to focus on two opposite sides of the business spectrum: small firms and large enterprises. While both of these organization types deserve the attention they receive, there is another segment with its own peculiarities and unique needs that often seems to be left out - mid-market companies.

Despite this sector being currently underserved, it offers plenty of opportunities for service providers that manage to identify and address its key pain points. In this guide, we talk about the nuances fintechs need to be aware of to work with mid-size businesses and uncover some of the untapped potential that lies in such collaborations. Keep reading to learn all the exciting insights!

The Mid-Market Gap: Why Is There a Lack of Niche Financial Services?

Mid-market companies often find themselves at a point when they have outgrown basic financial solutions but still do not have the resources or requirements of large enterprises. Due to this, they fall out of the scope of the majority of fintechs and have to get by either with either limited or overpriced payment service packages.

What’s more, middle market firms often struggle with raising the capital they need to expand their operations, invest in new technologies, or pursue strategic initiatives. This is because traditional lenders usually offer standardized loan products that are either too small to meet their needs or require collateral and guarantees that mid-sized businesses cannot provide.

How Can Fintechs Target the Mid-Market Segment Better?

Key Opportunities Mid-Market Companies Offer Fintechs

The gap in the mid-market niche is clearly a pressing issue in the modern financial scene. However, it also means that forward-looking fintechs have plenty of innovation opportunities and new revenue streams to explore.

Some features that service providers can use to address the challenges of the middle market include:

  • Streamlined onboarding and cost-effective integration. Financial companies that offer pre-built integrations with commonly used software platforms, offer APIs and developer tools for customization, and provide support throughout the implementation process are sure to be well-positioned to work with mid-market businesses.
  • Customization options. Another surefire way for fintechs to cater to the middle market is to offer more flexibility in their service packages. This could involve providing various levels of service tiers or allowing clients to choose features that align with their financial goals.
  • Focus on scalability. It is also crucial for service providers to ensure their tech solutions are scalable so that they can grow with businesses as they expand and evolve.
  • Access to capital. Fintechs can fill the gap in capital financing for mid-market companies by offering alternative lending options that are transparent and accessible. Some examples of such solutions that also minimize risks for lenders include peer-to-peer services, revenue-based financing models, and crowdfunding platforms.
  • Data-driven insights. Mid-market companies often lack the resources for in-depth financial analysis. Fintechs can bridge this gap by offering tools that provide actionable insights based on the company’s financial data.

On top of that, fintechs can also gain extra loyalty points from mid-market businesses by offering them targeted advisory services. Such initiatives could involve advice on mergers and acquisitions, capital market insights, and financial planning guidance that empower mid-sized companies to achieve their strategic objectives and scale up their operations.

It is also crucial to remember that mid-size businesses seek streamlined processes, data-driven insights, and innovative solutions to stay competitive in an ever-evolving landscape. Therefore, they are likely to pick service providers that leverage new technologies like Artificial Intelligence and Machine Learning algorithms.

Who Will Make the Most Out of Mid-Market Opportunities?

All in all, the ongoing discussions surrounding mid-size companies highlight the fact that this niche presents plenty of opportunities for financial service providers. Yet, industry experts agree that it will take time before these conversations transform into tangible solutions, as the middle market is diverse and complex, with businesses spanning various industries and facing unique challenges.

Despite the hurdles, we will see more and more financial firms cater to the demands of mid-market players. After all, the investments required to bridge the existing service gap are expected to be worth every penny, as those service providers that manage to make headway before the market becomes oversaturated will be in a prime position to establish themselves as segment leaders.

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