Why Business Banking Is a Great Investment
Updated: Oct 12
Guest Editorial by Leslie Chaffer, Vice President, Product Management, Apiture
Why are credit unions hesitant to invest in digital banking platforms for small and mid-size businesses? One reason might be a misconception that investing in and maintaining technology for business members is out of reach. The complex cash management and third-party integrations that businesses require don’t typically fit into consumer banking solutions. And because of this, some credit unions are worried they can’t afford to support this channel.
What many of these institutions don’t realize is that small businesses will pay for tools and functionality that are valuable to them. And today, 84% of small businesses feel that their primary financial institution offers few products for which they are willing to pay, according to a study from Datos Insights and Apiture.
Value — to small businesses — means tools that can save them time, increase convenience, or allow them to operate more efficiently. Giving member businesses the ability to open new accounts digitally, for example, offers a layer of convenience. And access to a modern, intuitive digital banking platform that can help them achieve these goals will keep these members engaged and satisfied. When given functionality that appeals to them, member businesses can be an excellent source of deposit and incremental non-interest revenue growth.
Determining What Resonates with Businesses
What businesses really want is to be recognized for what they are — businesses, not bankers. In fact, 50% of small businesses in the survey consider it a requirement that their credit union provide solutions tailored to them, rather than adapted consumer experiences. It is not so easy to shoehorn the functionality these member businesses need into a consumer experience.
Let’s examine some of the unique requirements that businesses have, all of which they consider valuable and some for which they may be willing to pay.
Sophisticated payment capabilities: Small businesses are increasingly making international payments and they require greater transparency around payments in general. Some small-business owners are less tech-savvy or familiar with initiating online payments and need additional information or assistance. One requirement is the ability to provide a confirmation page upon completing a payment.
Modern, user-friendly digital experience: Businesses are not bankers, and they don’t always understand the vernacular and the complexities of business banking. In fact, 26% of small businesses and 32% of businesses run by millennials and Gen Zers would consider switching financial institutions for a more modern, user-friendly digital experience. Simplify the experience for business members by providing intuitive processes and explaining functions in layman’s terms, and with this gesture, you build loyalty with business users.
Cash management: The payment capabilities that businesses need vary with their specific situation and go well beyond bill pay and external transfers, though these features are also useful in the right circumstances. Give business owners easy-to-use solutions for ACH, wires, multiple transfers, and positive pay so they can focus on running their business.
Financial health tools: At the top of most businesses’ wish lists is a cash management tool that integrates with online banking to help them with cash flow management, forecasting, and budgeting. Businesses need transparency into their financial health, including alerts when the business is experiencing a cash shortfall. Equally as valuable are data-driven tools that analyze the impact of different scenarios and actions to help the financial institution make more informed financial decisions.
Personalized experiences: Every business has unique needs. To make businesses feel valued, it’s important to include greater levels of personalization that demonstrate your understanding of their business and your ability to meet their unique needs. For example, sophisticated cashflow tools use analytics from a business’s digital banking data to provide curated insights, benchmarking, and personalized advice. A business can also incorporate detailed entitlements that drive differentiated experiences based on what a user can see and do.
Better integration with external systems: Businesses often need to integrate with accounting systems and other third-party platforms, such as merchant services or cross-currency payments software. A seamless experience and single login are important to 57% of the small businesses surveyed. Provide them with single-sign-on opportunities that increase the efficiency and value of the commercial banking platform.
The Value Proposition
What happens if you don’t have the products and services that businesses need? The reality is that they may look elsewhere. Sixty-five percent of small businesses will go beyond their primary financial institution to meet at least one financial need. And this represents money that credit unions are missing out on.
A good strategy is to determine what resonates with businesses and implement tools that are valuable for these members. The effort that financial institutions invest in tailored solutions for business members should pay dividends in attracting small businesses in a competitive marketplace.
For ideas on how your credit union can build value for member businesses by investing in a commercial banking platform, contact Apiture.