Credit unions spy an opportunity in small business, an unusual market for the usually consumer-focused financial institutions, and a segment that comes with a fair share of tech hurdles to clear.
"Credit unions are wading into the space and in some cases don't have the full expertise yet, and the business community sees [credit unions] as not really fully functional business partners," says Dan Munro svp and CIO for Community Choice, a Farmington Hills, Mich.-based CU which serves 53,000 members in the southeastern part of the state.
The institution is looking to grow its small business services in a couple of ways: by hiring local small business banking talent and by upping its tech game. On the latter front it's offering small business-specific payments as software as a service (Saas) with single sign-on and online banking for business clients.
The credit union hopes to move small business clients off of consumer platforms, a common challenge for credit unions and small banks that offer consumer online banking and bill pay services to small businesses, even though the treasury management functions of consumer platforms are not adequate for the needs of a business. For one thing, they often lack the required complex invoicing and deposit processing services businesses need.
"Some small business members were struggling through the consumer side of the bill payment offering, so we quickly decided to go to the [business] platform," Munro says.
That platform, iPay's Biz 2.0, offers a mix of cash flow management tools and business payment capabilities that are usually not included in consumer payment platforms, including customized user entitlements, accounts payable and receivables, electronic invoicing, custom audit reports and person-to-person payments accessed via the same log in as general online banking. Community Choice also offers mobile banking, debit and credit cards and remote deposit capture to small businesses, and hopes to tie the newly hired lending experts and the electronic payments suite to a sales pitch that uses tech acumen and personalized service to differentiate from local banks in a regional lending market that's still smarting from the recession.
Greg Adelson, president of iPay, a subsidiary of Jack Henry, says there is a lack of automation for small businesses among credit unions, but hopes that will change as the credit unions view the sector as an emerging source of revenue.
"Most credit unions don't have a ton of small businesses that they do business with, but there's more of that coming over time. We're seeing more interest from credit unions than in past years. Everybody's looking to get a leg up," Adelson says.
Other credit unions are also using payments tech to lure new small businesses. For example, Phoenix-based Desert Federal Credit Union is partnering with processing firm TransFirst to supply a portal that lets members download payments processing and other small businesses services as part of an effort to lure more small business members — only 8,500 of its 300,000 members are businesses.
And Travis Credit Union, a 177,000-member Vacaville, Ca.-based credit union, this week said it has licensed a broad suite of Fiserv products including CheckFree Small Business for electronic bills and payments; AML Manager for anti-money laundering detection, management and reporting; Branch Source Capture and TellerSource Capture for real-time deposits; Prologue for financial management; and LynxGate for ATM management. Also, the deployment of CheckFree RXP enables small business members to receive and pay bills on the credit union's website. Members can also schedule payments and monitor finances via alerts; receive e-bills from more than 400 suppliers, such as utilities, insurers, mobile providers and credit card companies; and use branch and teller source capture to make deposits without courier costs.