SMBs Need SMB Solutions

Businesses of all sizes are complex entities requiring a wide variety of services and support from a financial institution to operate efficiently. As a result, no two businesses are alike, and each one has its own strategic priorities and views on the most convenient way to engage with a financial institution. The diverse needs associated with the small and medium business (SMB) segment present an opportunity for credit unions to pursue an innovative new model for enabling a unified suite of financial management workflows designed specifically for SMBs, which we refer to as embedded banking.

One-Size-Fits-All Has Reached Extinction

Having a one-size-fits all approach to digital services is detrimental to an SMB and a credit union. Credit unions forego the ability to enhance member satisfaction and loyalty when they do not provide services SMBs desire, which include getting paid faster, automating data exchange with their accounting platforms for AR/AP workflows and providing valuable financial insights. With nearly 80% of SMBs managing multiple financial institution accounts, SMBs would also value the opportunity to streamline access to the accounts to view and manage operating capital.

An open embedded banking framework provides SMBs with the opportunity to expand their workflow practices and manage their business within a bank’s digital channels. This amplifies member loyalty by proving that a credit union is the go-to for member business success and reducing the risk of competition from third-party providers such as PayPal/Venmo, Stripe, and Square all of which are navigating into the financial service field.

Every small business is different and has a unique set of needs. This means that their digital services must align with what they need as individual entities. An individualized plan for managing finances can be the difference between a small business thriving or remaining stagnant.

Navigating the Gig Economy

In the same way that a traditional nine-to-five career setting is not for everyone, traditional banking methods are not suitable for every business. There are many people who take advantage of their entrepreneurial spirit to dive into careers that stray away from societal norms. According to a recent study issued by Global Payments, there are roughly 59 million people in the U.S. who are considered to be employees within the gig economy.

It is no secret that the gig economy is dominating the marketplace in this digital age, so it is time that credit unions enhance their digital banking platforms and suite of immediate payment services not only for SMBs, but also for those with careers that are a bit less conventional.

People who are self-employed or work as independent contractors find themselves in many unique situations and often navigate complicated regulations and bureaucratic hurdles that the average employee doesn’t face, and credit unions should be prepared to tailor their services and payment offerings to accommodate the unique needs for the burgeoning gig economy segment.

A Prime Partnership Opportunity

Credit unions can engage a knowledgeable and experienced partner to assist with an embedded banking transformation effort. Basic banking features are rarely enough for a typical member in the evolving digital services environment, and basic business services that have been product oriented or transaction based will not be sufficient for business owners who need a diverse suite of financial management workflows.

Many features that seemed optional a few years ago are essential today. There are many ways a credit union can position itself as a key player when it comes to appealing to small business owner members. SMBs want to know that they are valued as members and as business owners. Their small business is ultimately their livelihood, so enhancing this partnership is pivotal and mutually beneficial to both the credit union and SMB.

The digital banking features that SMBs desire include cash-flow analysis, proactive business insight and advice, streamlined account opening, loan applications, invoicing and payment acceptance, and digital customer service. These embedded banking features and more can be placed in a unified digital experience in order to create a positive, long-term engagement.

SMBs and the gig economy are growing markets credit unions should evaluate and cater to before valuable memberships are diminished due to expansion of services from fintech providers. Credit unions have a prime opportunity to become the epicenter of banking needs by expanding their offerings to cater to their SMB members, and the time to do so is now.

Keith Riddle is CEO of Americas at BankiFi, a Manchester, U.K.-based provider of business banking technology.