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Building Business Membership

(As Seen on CUInsight) – Local small- to medium-sized businesses are an untapped member segment for countless credit unions. As the gap in technology between credit unions and banks has begun to evaporate, credit unions are more able to support members as they go from consumers into their journey as business owners. There are approximately 33.2 million small businesses in operation in the United States. With credit unions continuously being pressured to expand income streams, increase deposits, and grow membership, serving small business should be seen as a crucial part of growth strategy.

What can a credit union do to grow their business membership?

Many small businesses do not see themselves as a business and often manage their business accounts alongside their personal finances. By supporting this approach and not building a strategy to focus on small businesses, credit unions are leaving potential business members unaware of the services a credit union can offer. By contrast, identifying members who need business solutions and helping them recognize their own business needs not only helps the business grow, but also deepens the relationship with the credit union.

What services does a credit union need to best support small- to medium-sized businesses?

With the modernization of cores, digital payment platforms, and the overall expansion of financial services credit unions can access through CUSOs and other fintech partnerships, credit unions can better place themselves in a position to support business needs. Credit unions can provide business checking, savings, and money market accounts, often with lower fees and better interest rates than those offered through other financial institutions. Many credit unions partner with online banking providers that offer business entitlement solutions that allow small businesses to expand the team managing their business activities. These activities may include payment of invoices, the initiation of ACH, and wire services. A credit union can offer these in addition to expanding consumer offerings like bill payment and remote deposit capture to suit a business member’s needs.

Credit unions offering merchant services give their business members access to tools that make accepting payments more efficient, further strengthening the credit union relationship. In addition, business loans can be tough for small businesses to obtain. A credit union can not only offer small business loans, lines of credit, or SBA loans, but it can offer these with additional flexibility in how they assess their business members’ loan eligibility. All of this further supports the growth of businesses in their community.

What can credit unions do to identify these members?

We often know who a business member may be simply because they regularly frequent a branch location and have a rapport with the credit union already. Here are a few additional ways for credit unions to identify potential business members:

  • Monitor transaction patterns. These can include higher valued transactions, payments to vendors, and payroll activity.
  • Note transaction frequency. Business accounts can often have more frequent transactions compared to personal accounts.
  • Track deposit trends. Monitor deposits higher than average, as well as deposits made more frequently.
  • Observe ACH/wire transfer usage. The regular use of ACH or wire transfers is a good identifier of a business member, as consumers do not commonly use these.
  • Ask your members. Reach out to members that fit into these business-like activities and confirm the purpose of the account. Make it part of your routine member interactions to discuss their account activity if it appears there may be business usage.
  • Leverage local business directories. Resources like your local Chamber of Commerce are a great tool to identify potential small business owners.

Combining any of these methods with analysis of the credit union’s core data or other data sources can effectively help your credit union identify business members and provide them with services that may better support their business needs. At the same time, by working with these business members and observing their needs, credit unions can prioritize what business banking solutions to invest in.

Why is it important to support business members?

Credit unions are focused on knowing their membership and being able to provide highly personalized services. Their ties to the local community reinforce the fact that it makes strategic sense to not only support businesses in the community, but to also provide them with financial guidance and services to further strengthen them. Supporting business members also allows a credit union to expand its revenue streams through business lending and higher deposits. The halo effect of being strong community and business supporters can also expand consumer relationships. Providing their business members with financial guidance and attending their business members’ events creates further awareness and connections in the community.

Conclusion

Credit unions can reach out to their core and digital solution providers and begin the conversation about what opportunities they may already have to support the small- to medium-sized business segment. Focusing on business members allows credit unions to leverage their strengths, such as community ties and personalized service, to meet the needs of this vital segment of the economy.

About the Author

Karen Martin, Assistant Vice President of Product Management at Synergent, is a dynamic and goal-focused leader with over 25 years of experience specializing in strategic partnerships, product development, and management. She excels at driving growth through innovative solutions and fostering collaboration with third-party partnerships in support of credit unions. Karen is also passionate about integrating diverse solutions to reinvent or enhance existing products and services.