Credit unions have created strong member loyalty based on service, trust, and relationships for decades. And while it wasn’t uncommon for a credit union to follow a member through major life milestones, times have changed and the reality of a consumer being a “member for life” grows more fleeting every day as credit unions face threats from fintechs, megabanks, and big tech.
Now more than ever, it’s important for credit unions to re-examine their strategy for attracting and retaining business members by implementing a life-stage marketing and product strategy based on members’ relatively predictable financial needs as they transition from one life stage to the next.
Considering the 5.4 million applications that were filed to form a new business in 2021 — the most of any year on record — in addition to small and medium businesses (SMBs) accounting for 98% of all business in the United States, there’s a distinct opportunity for credit unions to effectively serve new and existing business relationships. With new businesses forming daily, the time for credit unions to bridge this gap in a timely and real way has never been more important.
In fact, 67% of SMBs use QuickBooks, Shopify, PayPal, Square, and other top business platforms to manage their finances in conjunction with — or in place of — traditional banking services. Additionally, 47% of bank and credit union executives see fintech companies as a significant threat in the coming decade.
But why are SMBs turning to fintechs to meet their near- and long-term financial needs rather than using their primary financial institution? When compared to fintech business platforms that enable invoicing, marketing, POS capabilities, budgeting, and even assistance with taxes, traditional retail bank accounts are a poor fit for business members — even when the price is right.
That’s why fintechs like QuickBooks have become SMBs preferred providers. Their platforms can easily and conveniently handle the transactional needs of the business while also providing SMBs with the ability to scale services effectively as their business grows.
These platforms aren’t perfect, however. To mitigate risk for the fintech, SMB payments processed through these platforms can be delayed for more than a week before finally being released to the business. And at a time in the business lifecycle when managing cash flow can be tricky — this delay can be painful and even slow business growth.
For credit unions, this creates a massive opportunity to bridge the gap. Credit unions that take the time to create an intentional life-stage marketing strategy that follows a business from its early days of being run out of a retail bank account, through its potential growth into a commercial entity, are uniquely positioned to succeed in an overcrowded and highly-competitive industry.
It’s a tall order, but there are relatively easy and concrete tasks that can get you started on your transformation. For example, embedding basic invoicing and receivables capabilities into digital banking through solutions like Autobooks can help accommodate SMBs that manage their finances on the go, after hours, or from their proverbial garage.
Implementing digital banking solutions capable of scaling with the business and utilizing a single platform that can grow with your business members are additional ways your institution can bridge this gap and get started on your life-stage strategy.
By thoughtfully closing this gap, your credit union can provide greater support to SMBs while developing new relationships and growth opportunities.
About Jack Henry
At Jack Henry™, we believe the world is a better place with community and regional financial institutions — and we intend to keep it that way. That’s why we put financial institutions at the center of our modernization. We’re here to help you innovate faster, differentiate strategically, and compete successfully — all with one goal in mind: to improve the financial health of the people you serve.
