5 Steps for Credit Unions to Better Serve Small Businesses

Small businesses make up 99.9% of all U.S. businesses and account for 66% of employment growth, according to the U.S. Small Business Administration. Yet, when it comes to their banking needs, the small business market remains vastly underserved, especially when considering digital capabilities.

At the beginning of the pandemic, financial institutions were quick to support small businesses, offering relief loans through programs like the Paycheck Protection Program (PPP) and working to offer flexible service options for a remote world, including standing up order-ahead experiences and contactless payment options. Financial institutions were quickly creating a digital presence where there previously was none. However, that momentum has since slowed.

The reality is many financial institutions aren’t providing small businesses with the same options, product offerings and level of service available to larger enterprises, or the personal retail experience that credit unions are known for. Given this gap, it’s not surprising that an increasing number of small businesses (84%, according to Aite-Novarica Group) are seeking alternative providers to get what they need.

Credit unions are uniquely positioned to step up and uphold their people helping people mission, offering the services and exceptional experiences that small businesses need to succeed, driving a financially healthy community. There are five key steps credit unions can take to better serve small business members.

1. Know the niche – treat them like a small business. Small businesses need services catered to their specific needs. Repurposed retail solutions lack the features these customers need, and commercial solutions are often too costly and come with robust cash management solutions geared toward much larger companies with higher transaction volumes. Credit unions must be able to segment small businesses and offer them a range of products and services based on their distinct needs to help them securely and efficiently manage their business.

2. Streamline account opening and onboarding – making it fully digital (really). While institutions everywhere advertise digital account opening, too often the process is actually not fully digital. Many credit unions still require prospective members to call or go into a branch to complete the process.

With the acceleration of digital everything, business owners and consumers alike expect to be able to open and fund new accounts digitally and within minutes. Credit unions must continue to make improvements and conduct their due diligence when evaluating potential technology partners to ensure they have the flexible architecture that can deliver a digital-first experience that is integrated across all channels and touchpoints, resulting in more connected member journeys.

3. Offer sophisticated digital and self-service capabilities. As widespread staffing shortages persist, having access to sophisticated self-service capabilities and integrations is crucial for small businesses to keep their operations running smoothly. Whether it’s the ability to invoice and receive money, send payments, manage cash flow, create custom reports or interact with a credit union employee, these small business owners need to have confidence that their credit union can fill the gaps and serve their unique needs.

Self-service technologies offer small businesses the ability to continue business as usual without having to spend precious minutes or hours at a branch. The future of banking is self-directed, connected and digital first, and credit unions that are embracing the right technology and strategies will be well positioned to serve their small business customers.

4. Prioritize payments. Reliable, secure payment capabilities continue to be a top priority for small business owners. While there are plenty of options for small businesses to choose from for digital payments, it can be difficult to navigate this landscape and even more challenging to understand the benefits of each.

Credit unions that provide a seamless, flexible user experience with a higher level of security and accuracy will be well positioned to compete with the increasingly crowded and competitive landscape of alternative players. They should also provide diverse options, like digital currency and proactively communicate the value of each.

5. Put financial wellness at the center. Small business owners rely on their financial services partners to provide sound financial advice. This guidance should empower them to make intelligent decisions to help manage and grow their business.

Credit unions must make an effort to more proactively communicate the benefits that will resonate with small business owners and help them succeed; this likely means sharing different options with each small business member. And credit unions have a notable advantage over alternative competitors when crafting those messages: The wealth of data at their fingertips. Those that strategically leverage that data to personalize their offerings and messaging will gain a significant advantage.

Credit unions need to make small businesses a priority, especially as they face challenges in an uncertain economy with ongoing labor shortages, supply chain issues and inflation. Those that prioritize small businesses’ particular needs and can provide the digital, self-service capabilities they need to thrive will be well positioned to deepen and grow member relationships. By doing more to educate and guide small businesses to help them make the smarter financial decisions, credit unions can continue to be a beacon of strength and relevance in their communities.

Douglas Brown is President, Digital Banking for NCR Corporation and is based in Atlanta.