By W.B. King
Roughly three years ago, the Traverse City, Mich.-based 4Front Credit Union sought a solution for its small businesses members that would allow them to securely streamline the management of their finances.
“Business members, especially over the last two years or so, have been looking for the easiest way to move money— paying people, depositing checks — and to do it all remotely,” said 4Front Credit Union’s Vice President of Treasury Management Jeffrey Bassett.
After vetting a few options, the $850 credit union, which supports 98,000 members at 15 branches, partnered with the Detroit, Mich.-based Autobooks. The company’s goal is to make payments and banking easier.
When Bassett assumed his role with 4Front Credit Union in 2018, the credit union was already an Autobooks’ client. Over the course of the last three years, the return on investment has been significant.
“In 2018, we were averaging about $40,000 to $45,000 in invoicing and roughly $20,000 to $22,000 in collections with Autobooks,” said Bassett. “Last month (June 2021), we collected $460,000. So about 20 times what we were doing over three years.”
Currently, 4Front Credit Union has roughly 5,700 business members. This metric has also grown due to the Autobooks offering, noted Bassett.
“We’ve noticed significant business member growth,” he said. “This year, we’re looking at double the number of new business membership.”
Building the Small Business Member Model
Autobooks Vice President of Marketing Derik Sutton said the company has 106 clients, 22 of which are credit unions. Calling 4Front Credit Union an “early adopter,” he said the company is adding new credit union clients, ranging in asset class from $300 million to $2 billion, every year.
“We have always served credit unions from day one. The appeal is that we are a great on-ramp for micro and small businesses for banking functionality,” he said adding that historically credit unions have “lagged” in this segment compared to banking competitors.
“4Front is a credit union that wants to implement our new ideas. Their feedback and partnership have also been a key component to why we create certain updates and different functionality options,” said Sutton. “In turn, this allows overall credit union solutions to be better.”
And whereas credit unions might not have been historically on par with banks on business lending practices, credit unions were also once wary of partnering with fintechs. According to Bassett and Sutton, this reality has changed as well.
“We’ve got a number of popular products we’ve added through fintech partners, such as MemberPass, SavvyMoney and Plinqit,” said Bassett. “We have also added additional products, such as ACH origination, merchant services, payroll services, positive pay and online wire transfer, but Autobooks is our top treasury management product.”
Bassett said other players in the market like Square and Stripe have a large market share, but their customers don’t always receive the best support, which provides an opening for like-minded credit unions and fintechs.
“I see that as a huge opportunity for credit unions, because as I’m meeting with business owners, they indicate they have Square and that they’re using a specialty programming that’s using Stripe for processing,” he said. “I always inquire if they’ve had any issues yet, and if so, if they were able to get hold of somebody to take care of their problems. Most of the time, support is a huge frustration. They run into so many roadblocks whenever they have an issue, or they can’t get hold of somebody who can help. Autobooks answers the phone when it rings.”
Power of Credit Union-Fintech Partnering
In Sutton’s estimation, when it comes to “effectively serving members on the digital channel,” credit unions are “quickly realizing” that they “can’t possibly do it all on their own.” He added that increasingly, members have a variety of options when it comes to banking services, both business and personal, from large tech organizations and non-bank providers.
“To keep up, credit unions and fintechs become a natural marriage. Credit unions have longstanding member relationships, but at the same time, they need to make sure they continue to offer solutions/services those members need,” said Sutton. “Specifically, as they request more to be done in the digital channel and that is where we come into play.”
Sutton said that Autobooks recognizes that one of the “biggest differentiators as a company is our ability to distribute our services through the credit union channel.” He added that the approach is combining best-in-class digital capabilities and best-in-class digital service.
“Case in point, as part of our solution, we deliver not only a digital product but also a suite of go-to-market (GTM) services that help drive member engagement and adoption. Our GTM services are all built from our SMB insights that were collected through personal interviews of SMB owners,” explained Sutton.
“Those insights get translated into emails that come across as conversations rather than transactions. We also share phone call scripts that help educate rather than sell,” he continued. “Delivery of these messages is automated off of event triggers from member touch points such as new account opening, or data driven events, such as deposit activity from a non-bank provider.”
In the spirit of “people helping people,” Bassett said he regularly shares his positive experiences with Autobooks with peers. He often starts off with the question: “How many of your business members are still using QuickBooks?” The answer he most often receives is “just about everybody,” he noted.
“But when you dig into what the members are actually using QuickBooks for, the majority are only using it to email invoices, because it’s too expensive for them to collect through QuickBooks, and the balance of the platform is too complex,” said Bassett. “Autobooks does a lot of the same things, but it’s so much easier to navigate because it only does the pieces that these small businesses care about and are using, which is the invoicing and the accounting.”
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