How Regional Banks Can Win the Emerging Middle Market Moment

U.S. companies in the $1 million to $50 million revenue band are in motion. Fifty-three percent of them expect to cross the $50 million threshold between 2029 and 2031, and 91% of the fastest-scaling firms say they are very or extremely confident in hitting their five-year objectives. The ambition is not the question. The infrastructure is.

Welcome to the emerging middle market. PYMNTS defines this segment as companies generating $10 million to $50 million in annual revenue, plus high-growth firms in the $1 million to $10 million range that are on a trajectory to surpass $50 million within the next five years.

PYMNTS Intelligence data gleaned in collaboration with i2c found that more than half of firms in this cohort expect to surpass $50 million within the decade, while a large majority expressed confidence in meeting growth targets. Yet these companies sit in a gap between small business products and enterprise-grade treasury systems, a position that complicates their access to financing, payments tools and operational visibility, as Seth Perlman, global head of product at i2c, and Julie Schmitz, co-founder of Scale Solutions Group, told PYMNTS in a panel discussion.

For financial institutions and FinTechs, defining the segment is less about revenue thresholds and more about operational complexity. Schmitz described the segment as a “crossover” stage, where companies transition from owner-led operations to structured finance functions, often hiring their first CFO and scaling from a handful of employees to dozens. That transition introduces new demands on credit, payments and advisory relationships.

These firms tend to value proximity and trust. Schmitz noted that they often “will move their entire banking relationship to follow a banker that believes in their business,” underscoring that relationship banking still carries weight. Yet those relationships increasingly collide with systems that cannot keep pace.

Infrastructure That Stops Scaling

The core issue is not simply a lack of tools, but a mismatch between how tools are designed and how these firms operate once they scale.

Perlman said financial stacks built for companies at $3 million or $5 million in revenue rely on a single point of oversight and a narrow set of systems. As complexity increases, that model breaks down.

“The stack assumes that you’ve got one person that can see everything,” Perlman told PYMNTS. “But once you start growing faster and adding that complexity, the business will reach a point where they just can’t.”

The failure often becomes visible when a CFO cannot determine the firm’s real-time cash position without pulling data from multiple systems and spreadsheets. Research from PYMNTS Intelligence and i2c shows that fewer than one-third of larger, fast-growing firms have deployed enterprise resource planning (ERP) systems, even as most continue to rely on aging accounting platforms.

Credit That Exists, But Cannot Be Used

Nowhere is the disconnect more evident than in underwriting. Firms report adequate credit access on paper, yet nearly half say they miss growth opportunities because that credit is neither flexible nor timely enough.

Perlman pointed to the structural issue: Underwriting models rely on historical performance rather than forward momentum. “Those underwriting models were really built for firms where next year is probably going to look a lot like last year,” he said. “But for those fast-growing businesses, their next year is never going to look like this year or last year.”

High-growth firms often reinvest profits, limiting the clean historical profitability that lenders seek. The result is a system that restricts expansion capital precisely when it is most needed.

Disjointed Systems Inside the Bank

Even when credit is available, operational fragmentation adds friction. Schmitz described longstanding challenges in linking card programs, accounting systems and online banking interfaces. In some cases, businesses still manage multiple logins and reconcile transactions manually.

“This is a reality we still live in,” she said, noting that adoption suffers when systems fail to connect. The absence of integration forces companies to rely on manual processes, delaying decision-making and obscuring financial visibility.

FinTechs have made progress in bridging these gaps, particularly by embedding data flows into payment systems. Banks, in turn, are increasingly looking to partnerships to close the distance between legacy infrastructure and client expectations.

What the Data Shows About Pain Points

Firms with the highest growth rates often have the least mature financial infrastructure. Among the most cited needs is better integration across payments, credit and accounting systems.

Perlman framed the solution around three capabilities. First, real-time visibility across incoming and outgoing payment flows, integrated directly into accounting systems. Second, dynamic underwriting based on current cash flow and transaction data rather than static financial snapshots. Third, flexibility on the payable side, including tools such as supplier-linked virtual cards and adjustable spending controls.

“These elements,” he said, “are the stack.”

Schmitz pointed to practical examples of how those gaps are being addressed. In one case, a rapidly expanding veterinary network began with a simple deployment of virtual cards for office managers making ad hoc purchases. Over time, the program expanded to include supplier payments, shifting expenses such as medical supplies onto card-based workflows.

The result was measurable improvement in working capital management. Virtual cards extended days payable outstanding while maintaining timely payments to suppliers, allowing the business to stabilize cash flow across multiple locations.

The broader lesson is incremental adoption. Start small, Schmitz advised, then expand into more complex use cases as processes mature.

CFO Priorities and Payment Mix

For finance leaders, the question is not which payment method is cheapest, but which provides control and resilience. Perlman outlined a blended approach: virtual cards for flexibility and data capture, instant payments for time-sensitive transactions and ACH for predictable recurring expenses.

“The CFO of that company probably shouldn’t always be thinking about which payment method is the cheapest,” he said, but rather which supports working capital and supplier health.

Banks, meanwhile, have an opportunity to rethink revenue models beyond interchange, incorporating broader relationships across lending, deposits and payments.

Looking ahead, both panelists anticipate a shift from fragmented tools to integrated platforms. Perlman said he expects the current “collection of tools” to evolve into unified systems that combine payment orchestration, expense management and credit decisioning, all tied together through shared data frameworks.

Schmitz emphasized that community and regional banks remain well positioned, provided they invest in partnerships and integration. “They don’t have the technical teams in house to build out everything,” she said, but can compete by combining advisory relationships with modern infrastructure.

The emerging middle market is not waiting for the financial system to catch up. Growth is proceeding regardless of whether infrastructure is ready to support it. As Perlman put it, “the only question is whether we’re going to be part of the growth, or if we’re going to ‘stand there’ with our tools and be an obstacle to it … The companies that get this right, the banks and the FinTechs in the next 24 months, will own these commercial banking relationships well into the next decade.”