The operating account was once the relationship. If a business banked with you, you had them: the deposits, the payment flows, the cross-sell opportunities. The account was the anchor. The treasury and deposit relationship, along with its long-term value, followed from it. That logic still influences how most commercial bankers think about their book, although the economics increasingly say otherwise.

The erosion rarely looks like a lost relationship. More often, it begins with a business adding a fintech tool to close a payment gap, then opening a secondary account at a regional bank for a capability its primary institution cannot deliver. Activity spreads gradually across providers while the original account stays open and the relationship appears stable. By the time a bank recognizes the pattern, the most valuable parts of the relationship are already operating elsewhere.

For a closer look at how community banks can become more central to commercial relationships, download our white paper, How Community Banks Win Commercial Relationships.

Key Takeaways

• The operating account no longer defines the commercial banking relationship. Where operating activity runs does.
• When payment activity migrates, the low-cost operating deposits tied to it may move as well, increasing funding costs and putting pressure on margin.
• Fragmentation often reflects an operational mismatch rather than dissatisfaction with the banking relationship.
• Community banks that close the gap between relationship sentiment and operational reality can better protect their funding advantage and competitive position.

The Balance Sheet Consequences

Where payment activity occurs has direct implications for a bank’s funding position.

Commercial operating accounts—particularly noninterest-bearing balances tied to daily payment activity—are among the lowest-cost funding sources a community bank holds. When payment activity migrates to a fintech platform or a competing institution, the bank typically loses more than fee income. The operating deposits that fund the loan portfolio most efficiently often move with it, replaced by higher-cost alternatives that compress margin and put additional pressure on net interest income.

The account stays open, but the funding advantage leaves.

That pressure compounds an already difficult environment. Net interest margin is the top concern among community banking professionals, with core deposit growth ranked second, according to the CSI 2026 Banking Priorities Executive Report. Community banks entered 2026 with an average net interest margin of 3.71 percent and a core deposit ratio of 86.6 percent, strong foundations that become harder to protect once operating balances migrate elsewhere. These pressures flow directly from the commercial relationship question; they cannot be addressed separately from it.

How the Relationship Hollows Out

Businesses do not announce they are leaving. The fragmentation happens much more gradually.

A business owner adds an accounts payable platform because the bank’s portal requires too many manual steps; she opens a secondary account at a larger institution to access a wire capability her primary bank cannot deliver cleanly and, over time, routes more activity through whichever provider makes the work easiest. According to Datos Insights, 39 percent of companies now maintain relationships with more than seven financial institutions, and three in four small and midsize businesses work with at least one fintech provider. As that activity spreads, the bank moves from the center of the business’s financial supply chain to the edge of it.

The primary bank keeps the account, but the payments, the cash visibility, and the daily financial work have all moved elsewhere.

This is where the traditional definition of “primary bank” breaks down. The legacy measure was account ownership: where the business formally banks, whether a loan sits on the books, whether the relationship remains cordial. The operational measure is different: where operating balances actually sit, where payment flows run, where the business manages its day-to-day financial work. A commercial relationship can appear healthy by the first measure and be significantly eroded by the second.

The Operational Fit Problem

Fragmentation is rarely an act of dissatisfaction. It’s an act of necessity. Daily financial work must get done. Payroll runs on Friday, vendor payments go out, and accounts get reconciled—and that work will move to whichever provider makes it possible.

The structural problem is that most banks have organized their commercial products around how the bank operates, not around how the business operates. Portals are built for the bank’s product structure. Reporting follows the bank’s account categories. Onboarding runs through the bank’s internal processes. The business is expected to adapt.

But businesses don’t experience their financial activity as a set of banking products. They’re going through one operating workflow: collecting money, separating it by purpose or party, approving outgoing funds, reconciling activity, and reporting it to the people involved. When the bank cannot support that workflow from inside it—when the business must log into separate portals to check ACH batches, manually export transaction data into its account system, or navigate three different products to do work that should connect—the work migrates to whatever makes it easier.

According to Datos Insights, 42 percent of midsize and large businesses say their primary financial institution does not meet their payment needs. That figure reflects a mismatch between how banks have organized their services and how businesses actually run. The banks that are best positioned to retain commercial operating activity going forward will be the ones that invert that model—embedding capabilities inside the business’s workflow rather than requiring the business to work around the bank’s structure. The goal is to become part of the customer’s financial supply chain, not remain a service provider adjacent to it.

The distinction matters because it points toward a different response. Relationship management alone cannot close an operational gap, and addressing it requires understanding where the bank fits—or fails to fit—within the way the business actually runs.

What Commercial Primacy Requires Today

Operating-account primacy has always followed operating activity. What has changed is the number of alternatives businesses now have to route that activity elsewhere, and how little friction it takes to do so.

The strongest commercial relationships are defined less by where an account sits and more by where the business manages operating balances, moves money, approves payments, and handles its daily financial work. When more of that activity stays with the bank, the relationship compounds in value. Deposits become more stable. Treasury engagement deepens. The bank gains visibility into how the business manages cash, moves funds, and plans for growth—the kind of data that makes lending decisions faster and relationship conversations more meaningful.

The opposite dynamic is equally compounding. A commercial relationship can appear stable while its most valuable activity moves elsewhere—payments running through another provider, cash visibility managed on another platform, credit needs shifting toward lenders that offer a faster path to approval. The account stays open and the loan remains on the books, but the bank is no longer at the center of the financial supply chain. It’s one provider among several. That position is harder to recover from than it appears on a call report, and the balance-sheet consequences—higher funding costs, compressed margin, reduced lending capacity—may emerge gradually enough that the erosion is easy to miss until it becomes structural.

Where to Start

The path back begins with an honest assessment of where operating activity actually runs—not just where the account sits. A commercial client with an open deposit account and an active loan may be routing payroll, vendor payments, and treasury management through three other providers. That is a fragmented relationship, regardless of how it scores on a call report.

The strongest opportunities for recapturing that activity aren’t spread evenly across the commercial book. They concentrate in businesses with recurring money movement, multiple parties or entities, approval and control requirements, and reporting needs—the segments where operational complexity is highest and where the bank embedded in the daily workflow is hardest to displace. Construction firms managing draw schedules and subcontract payments, property managers overseeing multiple entity balances, law firms handling trust accounting, title companies coordinating disbursements: these are not edge cases. They are commercial clients where the gap between what the bank offers and what the business needs is most consequential—and where closing it creates a more durable relationship.

Closing it requires a different model than most community banks currently run. Rather than presenting businesses with a set of products and expecting them to adapt, the banks gaining ground are the ones designing around how the business already operates: collecting payments, cash visibility, approvals, and reconciliation into one experience instead of separate portals; building controls and reporting into the relationship rather than bolting them on; and making onboarding the start of an ongoing capability that grows with the business rather than a one-time event.

Community banks already hold a meaningful advantage here. Businesses in these segments still value the local relationship and market knowledge that comes with it. The opportunity is to extend that trust into the daily operating workflow, turning a valued banking relationship into the primary financial operating relationship the business relies on to run.

Our white paper, How Community Banks Win Commercial Relationships, maps what that looks like in practice, including how the commercial experience changes when operational gaps are closed, how needs vary across business segments, and how community banks can close the execution gap without matching larger institutions capability for capability.

Download the white paper