There is a huge opportunity for credit unions to better serve small- to medium-sized, very profitable local businesses. Understanding that these businesses need both deposit and lending assistance, more credit unions are striving to expand their member business services and improve how they attract this segment of the market. Focusing more heavily on the needs of local businesses presents a unique opportunity for credit unions for two simple reasons: First, many credit unions already have a significant number of small business relationships, and second, small businesses have historically felt neglected by the financial services world and are starving for attention typically given to retail and commercial segments.
Small businesses have become a strong target market for credit unions. They're profitable, tend to have personal share accounts as well as business accounts, and are loyal. If a credit union determines how to best serve this blended personal and business segment, they can hit a home run and generate considerable deposit and lending growth. Credit unions, which are already strong in local brand and known for a "relationship" focus, can be the savior of local businesses in significant need of specialized services.
Typically, small businesses default to the retail side of their financial institution, which is not big enough for corporate bankers and misunderstood by retail banking executives. Even the internet and mobile banking vendors have somewhat overlooked small businesses. When businesses remain on retail/consumer platforms, they usually avoid fees but are underserved.
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What do these businesses need? They need better payment tools, like the ability to make an ACH payment or send a wire, and possibly a version of business bill pay. They need entitlements, the ability to turn on and off access to selected features for various employees, or to set dollar limits when transferring money or making a payment. Small business owners need a more functional version of consumer digital tools, and ideally businesses want to commingle their relationships and see personal and business accounts on one system that allows them to keep the two accounts separate, yet accessible using a single interface. Small businesses need these solutions to be available on traditional as well as mobile and internet channels that are intuitive and easy to use, regardless of whether they are on a desktop or a smartphone. Confusing, high-end corporate treasury management tools, sometimes used to replace a business' retail system, are notoriously hard to understand.
In addition to giving them digital tools to run their businesses, consider the opportunity to provide them a mobile app to put in the hands of their customers, allowing the customers to pay the businesses easily and engage often. Think about your credit union as a small business with a mobile app and an internet presence. Small, local businesses want this opportunity also. Given credit unions' reach in local communities and their presence in the local business networks, they are in a perfect position to help, and they have the technology to do so. In many cases, a credit union's own mobile banking app can be easily repurposed and rebranded for these local businesses. In addition to helping smaller businesses catch up with the Starbucks apps of the world, this approach assists businesses with accounts receivables – when customers pay via advanced mobile payments technology, businesses get paid faster and cheaper.
Credit unions have a choice. As they strengthen their local presence, should they offer a "me-too" solution? Or should they innovate and serve local businesses in a way never seen before? Provide bespoke features, tailored for local businesses and combined views of personal and business accounts. By helping businesses go mobile, credit unions can truly leverage their unique, strong local brands and focus on relationships that can really change the member business service game.
Robb Gaynor is chief product officer for Malauzai Software. He can be reached at 512-961-5699 or [email protected].
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