Credit Unions Can Win Big With Small Business Banking

Credit unions of the past were laser-focused on their target market, quietly growing their base.

Today’s credit unions are opening membership to broader audiences. They’re also delivering a wider variety of products and services with a much bolder voice.

As access to low-cost deposits and new share accounts slowed in 2023, growing deposits became a top priority for credit union CEOs. To accomplish that growth goal while continuing to diversify the membership base, Jack Henry’s annual Strategy Benchmark found that 62% of credit unions now plan to expand their business services and target a business niche over the next two years.

A Solid SMB Market Opportunity

This interest in the small- to medium-sized business (SMB) market is unsurprising – it’s been projected that this niche represents a $13.7 billion revenue opportunity for those who have the credit union software and credit union solutions needed to serve a variety of businesses.

With Americans filing 5.5 million applications to start new businesses in 2023, there’s no better time for credit unions to build on their strengths: innovation, relationships, and affordable financial services that can attract and serve this growing SMB market.

Tools of the Trade

Today’s business owners are more focused on digital banking capabilities than location, fees, or product variety when it comes to choosing their primary financial institutions. That’s why you’ll need the right technology and tools in place to execute a business banking strategy.

Key features and functionality you’ll want to consider when investing in tools and technology for your business banking strategy are:

• A scalable digital platform that makes it easy for your members to transition from the retail experience to a business-focused one as they make the move from consumer to gig-economy worker, solopreneur, or new business owner.
• Fraud prevention tools such as positive pay to prevent fraud or an in-app communication tool that takes high-stakes communication out of risky email channels. Things like wires or ACH batches being secured behind a fully authenticated channel eliminates the risk of phishing, spoofed email addresses, and other potentially fraudulent activities that create expensive loss scenarios.
• Embedded invoicing and payment acceptance capabilities that help your business members manage their cash flow and receivables, providing the functionality that they’d otherwise get from a third party. Keeping that functionality in one experience within the credit union builds the relationship and engagement with the member.
• Flexible controls and entitlements that make it easy for businesses to give the right level of account access to new employees or financial stakeholders like accountants or tax advisors.
• Tools tuned for their needs so your business members only see the functionality they need, keeping their digital experience clean and user-friendly.
• Cash position and reporting that makes it easy for the SMB to understand their financial picture quickly, giving them the ability to make informed decisions about how to best manage their money.

 Opportunities for Members’ and Credit Unions’ Revenue Streams

While businesses often juggle five to eight financial service providers to manage their financial needs, credit unions who can provide the necessary services – from billing, invoicing, and payment acceptance to ACH, wires, payroll, and fraud prevention – will stand out amongst the competition.

Beyond growing your membership base, there are strong financial benefits to serving this market well:

• Businesses carry an average balance that’s 2x higher than a retail account, powering low-cost deposit growth.
• Removing the need for SMBs to rely on tools like Venmo or PayPal boosts deposits since only $1 out of $8 collected through a third-party payments tool ever makes its way back to the primary financial institution.
• Reducing fraud through tools like positive pay reduces expenses, time spent on legal fees, and recovery costs which are often futile.
• Growing businesses create attractive lending opportunities for your credit union.

Set Yourself Up for Success

With the right technology in place as a foundation, you’ll want to ensure your credit union spends time developing an onboarding plan for new business members. With a solid, well-planned onboarding experience from day one, you set the stage for the mutual success of your SMB and your credit union.

As you create an onboarding plan, be sure to address these key considerations:

Adoption marketing and in-app messaging.

• Ensure your business members have the information they need to both adopt and use their new, more powerful business banking tools.
• Send onboarding messages through your secure in-app conversation tool to help encourage adoption.
• Remind businesses to try a more advanced piece of functionality through an in-app marketing message.
• Create graphics or create personalized onboarding pages to walk them through their new accounts and services step-by-step.

Fraud prevention best practices.

• Educate your small business accountholders about the risks and root causes of business email compromise (BEC) and how they can avoid expensive losses by using authenticated communication tools rather than an unsecured channel for high-risk transaction discussions.
• For those using positive pay services, ensure the business understands cutoff times to review exceptions and recommend they choose “return” as their default setting if an exception is not decided on time.

Digital lending opportunities.

• Even before SMBs identify gaps in their funding or cash flow, ensure they know where they can go to apply online.
• Evaluate your current LOS and make sure the experiences are the same and create the story you want your members to remember both consumer and business lending functions.

One-to-one service.

• Remind your members that if (or when) they get stuck, there’s always authenticated chat, video chat, and screen sharing to help them learn new processes or tools. It’s the kind of in-branch service that your members expect, just delivered digitally in their moment of need.

Win Big With Small Businesses

As your credit union addresses today’s challenging business environment, remember that the right digital technology can make or break your success. When your tech aligns with your goals, anything is possible.

Contact our digital experience team to learn more about how Jack Henry can help you deliver your business banking strategy, so you can start winning big in the SMB market.