Business Checking: An Emerging Opportunity (Value-Added & Rewards Accounts)

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This article needs no introduction. But it does need you to honestly answer a question:

Compare today versus 20 years ago. Is it easier or more challenging to grow deposits?

If you’re like most institutions, that question is obvious. The largest banks and credit unions have enormous marketing and technological power to attract new customers. And even for them, the job is more difficult.

With the emergence of fintechs, people aren’t even putting their money in normal accounts. Ok, maybe it’s backed by a mega-bank, but the face is new, young, fancy, and definitely doesn’t shout traditional financial institution.

Deposits are essential to your operation. So where can those funds originate? Did someone say “business”? In this article, we will discuss opportunities for growing deposit volume and income through your business accounts.

Emerging Challenges For Personal Deposits: Fintechs

The battle for deposits rages on. Driven by the now-enormous crowd of not-really-banks-but-they-manage-money-so-people-don’t-really-care, the competition for dollars is hot and getting hotter.

You may recall our continued look at innovating your personal checking accounts.

It comes down to finding the right solutions for retaining and attracting members (and their dollars). At your institution, it might mean Value-Added Checking. Perhaps a rewards checking/savings program makes the most sense.

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Regardless of the path you choose, the task isn’t getting easier. At least you’re taking action. Turns out, there is a whole category you may be missing: Your business clients.

They’re ready for innovation. Are you ready for the growth?

Business Accounts

Personal accounts aren’t the only ones facing competition. Businesses now have more choices when it comes to managing their funds. And for institutions promoting business accounts, you know how important retention and growth is in this category. Yet it is easy to just stick with what you already have.

Doing nothing is the wrong approach. There are opportunities. We’re going to help you make the most of them, while sharing best-in-class products and services.

Small Business as a Market

Why bother with business accounts? Well, as of 2022, they make up 99.9% of all businesses in the country. But how many could that be?

• 33.2 million small businesses (under $6 million in annual sales)

Paraphrasing someone I know: “You can get by with over 30 million accounts, if you budget properly.”

Concerned this is national data and won’t apply to your serviced territory? Find the Small Business Profile for your state.

No matter how you slice it, that’s a lot of opportunity. But are the big banks already dominating in this channel? In a word, yes. However, it’s not as open and shut as it may seem.

Business Banking Satisfaction Struggles

First, can I get three cheers for the beautiful alliteration in the above heading? Ok, now, back to the topic.

Business customers aren’t especially thrilled with their current banking arrangements.

According to the Cornerstone Advisors survey of 1,009 small to medium size business owners and executives, March 2023 just 61% of small business banking customers say they are very satisfied with their business checking account provider. Yet, two-thirds of those SMBs are somewhat or very likely to look for new banking relationships within the next 12 months.

Quick math: That’s 20 million businesses which are open to learning about your checking solution.

And as we all know, acquiring a small business’ checking account can lead to far more financial services, including:

• Money management systems
• Merchant services
• Lending

Stand Out From Competitors – Search Engine Optimization (SEO)

So you’re considering improvements to your Business Checking. Great! Normal practice is to check out what others are doing. You know, your competition. How?

Most people just search, ie. “Google it”. So, what happens if we search “business checking accounts”. 288,000,000 results. Hmm, not sure I’ll have time to go through them all. What if we use our region? 101,000,000. Much better. Should be just a few days for the intern, right?

Given this is what your potential business customer will do, how can you elevate your search result position? Consider your own habits…if what you want isn’t at the top of the first page, it’s ignored (much like more than 92% of users).

So how can you nudge your institution into that exclusive club of top 5 search results? First, let’s see who composed that first page:

• Most of the top results were from “Best of” lists
• 2 results were financial institutions

“Best of” List Inclusion

“Best of” lists are some of the most commonly searched/visited pages online. Think about it. When you want to research something, do you look up the “worst dishwasher” or “best dishwashers in 2023”?

For the credit union and banking world, Fundera, NerdWallet, BankRate, and Fit Small Business are some of the most prominent sites. Take a look at some of those links. What would it take for your institution to be featured?

Plus, these lists share information on the accounts offered by your competitors (and the best of them, to boot!). What makes them earn that position and how can you best compete?

Optimize Your Financial Institution’s Online Presence

Remember those two financial institutions appearing on the first page for “business checking accounts”? Just from their sheer rarity, we know it’s a hard task. It’s apparent they’ve taken great efforts to be there.

This implies their online presence is heavily optimized for this keyword (and likely many others), including website content, social media, blog, and more. You can do this, too. Here’s just one list of CU-specific SEO ideas.

Not in a position to invest in SEO efforts? We’ll be honest, whatever you introduce is going to be a harder sell without it. At the very least, consider speaking with the writers of some reputable and highly-trafficked “Best of” lists.

Building Your Business Account: Two Approaches

What does every business-focused checking account have in common? They’re all checking accounts. So how does yours stand out? Ok, so you offer Free Business Checking (with limitations). That’s great. Lots of other institutions offer it, too. To stand out, you must provide more.

Free, Plus Something Else

Free will always attract people. Everyone wants to feel they’re getting a good deal. And what could be better than free? Of course, you know that free means “just the basics”.

For business accounts, Free/No-Fee Checking is different than what you offer to individuals. Fees are waiting on the sidelines for a range of things, from transaction limits to daily minimum balances. Some online-only banks (and Fintechs) do offer truly Free.

Their primary appeal is an easy-to-use (from anywhere) online platform. And you can learn a lot from this strategy, as these institutions ensure their platform is best-in-class. It’s literally their selling point, so it had better be good.

What if a business deals in cash? That makes things a bit more complicated. If only some institution had physical branches to assist. Oh, right, that’s you! And, of course, you’re available to provide personal advice (something the Cornerstone Survey draws significant appeal).

Value-Added & Rewards

Free is great, until it’s not enough. Since you’re about serving your members, business clients included, you must deliver value. And that doesn’t come free. So how do you show that value to business owners?

One place to start is your pricing model. Are the things you charge fees on reasonable? Do the benefits you include for free appear interesting to someone doing due diligence on your account?

Looking only at the pricing model, do your accounts stand out from the pack?

Beyond “Free”, people, especially business owners, are attracted by “Value”. How does your business account deliver more value than what’s being paid through fees, subscription, or frustration?

We have a few ideas. 

Value-Added (Subscription-Based)

You pay a monthly subscription for services providing value. Netflix, Amazon Prime, your coffee vendor, copy machine service, and more all make life better and easier. For what you consider to be a fair price. Otherwise, why keep paying?

Could your Business Checking platform do the same? We believe it can. For a reasonable monthly cost, such an account may provide (in addition to the traditional features):

• Payment & Cash Management System
• Data Breach Resolution
• Fraud Expense Reimbursement
• Business Promotion and Customer Growth
• Employee savings programs
  • Health
  • Wellness
  • Shopping

Would such a list of bonus features help your account stand out in the crowd?

Also, since the financial institution is collecting a monthly fee, a new revenue stream begins, enabling additional community support, technology improvements, member give-back campaigns, or anything you can imagine!

Value-Added Business Checking is one option. In the meantime, learn more about the basics of Value-Added Checking (a personal checking innovation).

If your institution wants a different option from Value-Added Checking, the other path is Rewards.

Rewards (Usage-Based)

With personal accounts, rewards are a common feature. Encouraging “top-of-wallet” activity, debit card rewards grow alongside transaction numbers and amounts. While credit card benefits may be higher, debit card programs serve a larger audience.

What if you could offer a similar rewards program for your business debit purchases? The systems necessary to process these rewards seamlessly are more common. In fact, your existing core provider may already offer support! 

Rewards, especially cash-back, is a valuable differentiator for business accounts. In some cases, it may assist the business owner in offsetting needed fees (thus, you’re not stuck offering only a “Free & No-Fee” account).

Of course, the more they use the account, the more they earn. And the more your institution earns in interchange fees.

The challenge for a rewards program is keeping usage up. Since it’s “future pleasure”, the incentive to accrue points or advance tiers is not consistent. Your account holders may love the idea of the perks, but not all will change habits to ensure your card is the one used.

A Value-Added account earns for your institution whether the account holder uses the benefits or not. Of course, those who make the most of the relationship will have the highest loyalty, whether it’s a Value-Added or Rewards based account.

Checks Remain Dominant

We should mention one final challenge for business accounts. According to the 2022 AFP Electronic Payments Study, thirty-three percent of B2B payments in the U.S. and Canada continue to be made by check. Unlike with personal accounts, the use of checks (through Bill Pay or direct paper exchange) may be a difficult habit to break.

Growing Business For Your Business Checking

Business checking is an enormous opportunity for your financial institution. And word’s out. In our area, the larger credit unions are actually buying/merging small banks just for their business accounts.

Why the appeal? Business owners have greater need for complex financial services. They also tend to handle larger volumes of money. And there’s a lot of them. While only 56% of start-ups are still around in five years, some 30 million small businesses compose 99.9% of employers in this country.

That’s a lot of committed business owners! (And a whole lot of opportunity!)

As a community financial institution, isn’t this the perfect group to help raise their odds of success? Your efforts return dollars locally, while supporting job growth, economic prosperity, and a more profitable institution. Which then offers ever-better services for your account holders.

Now that’s being a true community partner.

Image credits: Mouse and wallet by Mohamed Hassan. Computer and coffee by StockSnap. Digital marketing graphs by Photo Mix. Woman and telescope by Pexels. SEO by Diggity Marketing. People working outside by StockSnap. Credit cards in jeans by Kris. Writing in checkbook by Adriano Gadini. All from Pixabay. People shaking hands by fauxels on Pexels. Women in flower store by Amina Filkins on Pexels. Woman stretching by RDNE Stock project on Pexels.