Winning Small Businesses With Personalization
Credit unions (UCs) are well suited to the unique needs of small businesses that Wrestle to find the services they need from other financial institutions (FIs), such as small loans with less return to lenders. Overall, members are already very interested in commercial lines of credit through their CUs, and CUs can also leverage their reputation for personalized service and high member satisfaction ratings to attract small business owners. Coupled with better terms and services tailored to the needs of small businesses, the strengths of UCs match well the growing banking needs of small businesses.
The challenge for CUs is to take what they have and augment it with digital banking tools that add – rather than replace – the special relationship that CUs have with their members. Digital banking is important to consumers, as the pandemic has forced even those who have resisted digital experiences in the past to familiarize themselves with the convenience of the internet and mobile. Forty percent of adults are said to be cash IF looking for a better digital experience that gives them more functionality. Already, 11% of UC members are looking for FI products that offer better online account management than what they can get through their UC.
The latest edition of Credit Union Tracker® examines how CUs can make the most of digital banking technology to ensure they provide the best possible service to members while retaining the personal touch that sets CUs apart from other FIs.
Developments around the world of credit unions
New York State has opened its Excelsior Linked Deposit Program to UCs, manufacturing it is easier for them to offer low interest loans to small businesses. As part of the program, New York is providing financing to allow for a lower interest rate during the first four years of a small business loan. The state deposits the loan amount with the CU, accumulating interest at a lower rate. The program aims to close the “equity gaps” that prevent traditionally marginalized communities from starting and growing small businesses.
All over the world, CU membership grew up 29% in 2020, according to a study by the World Council of Credit Unions. In 118 countries, CUs now have more than 375 million members. The significant increase was attributed to digital initiatives and pandemic-related financial assistance attracting new members, as well as continued efforts to ensure retention of existing members.
As the holiday season approaches, consumer habits show signs of both optimism and uncertainty. The October PSCU Payments Index attributed a decrease in credit card default and an average increase in credit scores, in part, to government stimulus payments distributed in connection with the pandemic. At the same time, credit spending rose 16%, while debit spending also rose 13%, despite supply chain disruptions. The cost of living is also rising, with increased inflation and rising commodity prices.
To learn more about these and other CU developments, check out the Tracker News and Trends section.
Truliant Federal Credit Union on Combining Personal Service with Digital Banking
Small business owners may not receive the personalized service they want from large financial institutions, and the loans they need may even be too small to be worth it. Credit unions are well positioned to meet this need.
In this month’s report, Jeff Hibbard, senior vice president of digital experience and business transformation for Federal Credit Union Truliant, explains how UCs can strike a balance in providing in-person and digital self-service to meet the unique needs of small businesses in the communities they serve.
Deepening: Meeting the Credit Needs of Small Businesses
Although they consistently rank well above other FIs in terms of borrower satisfaction and occupy a prominent place in their communities, CUs tend to have one of the smallest shares of total loans. to small businesses. As small businesses flocked to apply for Paycheck Protection Program loans during the pandemic, only a fraction of those loans were taken out through CUs.
This month’s Deep Dive takes a look at how UCs can position themselves and themselves to attract more business banking, both inside and outside their membership.
About the tracker
The Credit Union Tracker®, a PYMNTS and PSCU collaboration, examines the latest trends and developments shaping the UC space and how UC can attract and retain small business consumers.