Business Checking To Compete With Mega-Banks

Editor’s note: This is a guest post by our friends at StrategyCorps. They work with hundreds of institutions like yours on maximizing checking programs and overall relationships, both for individuals and businesses. In addition, our Value-Added Checking product is powered by them. Article edited to match our Learning Library style and formatting guidelines.

Community banks provide about 60% of SMB loans nationwide, according to a study by the Independent Community Bankers Association (ICBA). As a credit union audience, why care? Because this puts community banks at the center of their…communities, poised to make positive impacts from a position of service. Where you can also be.

And what other institutions take the lion’s share of this business? Mega-banks. In fact, uncertainties and challenges of today are actively driving people to those options. Things like a high interest rate environment, an uncertain future of commercial real estate, deposit liquidity concerns, and the looming possibility of a recession (for most or even just a segment of the population) are all leading people to large institutions.

That’s not to mention the impact fintechs are having on small businesses and younger generations.

Faced with these challenges, SMB owners gravitate towards community banks and the very large institutions to achieve better rates, reduced risk for payroll funding, and modern digital experiences. Yet the latter can offer more: Advanced cybersecurity tools, back-office support, plus credit and funding resources. These are tough for any community FI to deliver…or are they?

Community financial institutions like your credit union cannot (and should not) compete with the big banks head-to-head. Like your local SMBs, it’s about winning by delivering quality products and deeper relationships through enhancing the experience with value. In other words: Give them what they want…and need.

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Where Are SMBs Today & Headed?

Our partners at StrategyCorps were curious to better understand these challenges and questions. Their commissioned study gives a snapshot on where SMBs are along with insights on where they may be headed. Additionally, it helped understand what business owners value most in a banking relationship, and the opportunities your credit union has build relevancy.

What they found was encouraging.

While the banking crisis in early 2023 motivated many small business owners to shift their accounts to mega-banks, interest remains in keeping banking local. It just has to be worth their while, with assurances funds are safe. That doesn’t solely mean “best rates”.

Considering the checking account is the core of a relationship, it’s a perfect place to unify additional features which help the business thrive. Of course, if you’re on that path, anything you offer must be done in a way that doesn’t stress your own credit union resources. The goal must be to make businesses run smoother with fewer unexpected challenges.

According to the study, SMBs are looking for ways to manage their financial wellness and get protection from outside threats. Robust features including fraud protection, cybersecurity, and payment management are at the top of their list. Consider the following:

Cybersecurity

Every person and business has a digital footprint. For the latter, protecting it can be the difference between business success or failure. From data breaches to fraud, direct costs, as well as those to your reputation, can be costly. Imagine if your business checking included an extensive suite of cybersecurity products. Does that turn some eyes?

Integrated Invoice and Payment Acceptance

Businesses need a robust and reliable way to accept payments. As a financial institution, you are best suited to curate and offer industry-leading options for your account holders to use. Then, by including them as part of your checking, it lets owners focus on growing their business.

Financial Reports and Bookkeeping

Unless your business is bookkeeping, it’s often seen as a necessary challenge and cost to operating. While your payment and invoicing integration saves hours of frustration, so too can a reporting and bookkeeping system. Deliver back-office help to keep your SMBs focused on their missions without needing to hire other firms or staff to maintain their books, as part of your checking.

Business Credit Scores

Did you know funding decisions can be based on business credit scores? Do your SMBs have easy access to their own, or the guides to help grow them? Offering this insight within your checking account helps empower and delight business owners.

Employee Benefits

A business is only as good as its employees. Help your account holders retain their best by providing employee benefit packages far beyond what they can provide on their own. Again, included within their checking account. Would you ever consider switching away?

Give Small Businesses What They Need

The time when checking was just an account, some checks, and pile of deposit slips is over. Competitive differentiation comes from making your account more attractive. It’s about the “more” that you offer which aligns with their goals. Business owners need these products anyway; why not save them time and effort by bundling them into a single offering?

Missed the link earlier? Get the Business Checking Study.

Build and empower a new generation of local businesses by providing the services they need. We work with the team at StrategyCorps to offer both personal and business checking product solutions. You may also visit our Checking section of the Learning Library to better understand the importance of enhancing your business checking.

Want more of this? Subscribe to the Learning Library to get insights weekly that will help grow your credit union and delight members.

Article adapted from original by Gregg Early. Gregg is a financial writer and editor who’s worked as a journalist for American Banker, Bond Buyer, and others covering the SEC, MSRB, Supreme Court, and various Congressional finance committees. His expertise is fintech, emerging technologies, biotech, ESG, green tech, cryptocurrencies and derivatives. His work has been featured on CNBC, CNN, and Bloomberg, as well as in The New York Times, Washington Post, Wall Street Journal, and Businessweek.