ORLANDO, Fla.-As consumers hunker down and limit their spending, credit unions and other lenders will have to look to small businesses for loan growth, according to one expert.
Baron Unbehagen, VP-sales at Postilion, suggests credit unions invest in technology now that appeals to small businesses, such as remote deposit, payroll management and mobile ACH transfer solutions.
Unbehagen said he knows credit union budgets are tight, but the good news is that credit unions are in a position to build on the previous expenditures of others. Huge technological investments on the part of giant banks made small business banking much easier for many companies that had relationships with credit unions or small banks-that technology lured those businesses away from their local institutions.
Businesses Always Need To Borrow
"A lot of business had been stolen by the nationals, regionals and super-regionals," Unbehagen said, but the financial meltdown has turned the tables as huge banks scramble to limit risk exposure and shut off credit lines. But businesses of any size always need to borrow, even if they are not expanding operation. Many of those same businesses that left their local institutions are now stuck, unable to make payroll because they cannot get enough short-term credit. The logical choice, Unbehagen believes, is for them to turn to their local credit unions.
"He's going back to the guy he's in the Rotary Club with," he continued. "Credit unions have money to lend...(but) the only way to get those small businesses back into the fold is to offer the same services as the larger institutions."
While many smaller credit unions may feel like they are unable to provide those services because they do not have huge amounts of capital, Dinesh Sheth, CEO of uMonitor, says that is not the case. He pointed out that his firm's uOpen product, which allows for fully electronic processing of individual account opening, can be purchased for $10,000 and be up and running in 30 days. Integrated Bank Technology CEO Mark Dittman similarly noted that check capture at the branch would require an $800 investment for the actual scanner, while his firm charges a few cents per item.
"There is a net gain for each example we have of this (being implemented)," he noted, pointing out that increased automation allows staffers to spend time cross-selling members.
Concerns over the cost of investment is not the chief obstacle, Sheth concurs: "In credit unions what we have seen is that it is the mindest of the CEO that needs to change."
The same goes for targeting small businesses and providing them with services that they are used to enjoying at larger institutions. Unbehagen notes that Postilion, as many other vendors do, charges based on the number of transactions taking place, allowing credit unions of almost any size to utilize its technology.
