Change in the Wind Reveals Which Business Deposits Are Primed for Growth
While Sound Credit Union's business services program has been in place since July 2007, a litany of bank mergers and closures in the area has helped propel its business deposit portfolio over the last year.
"We haven't had to heavily market our program," said Carl Roer, vice president of lending at the $536 million CU in Tacoma, Wash. "Our excellent branch network has also allowed it to grow naturally."
Middleman said the CUs that provided data came from all over the country and had a mix of asset ranges above and below the $300 million threshold. Regardless of their differences, credit unions generally take three to five years to build a business deposit program, he added. Some of the factors that may help with expansion are a sophisticated product mix, enlarged as appropriate over time, and a staff that is knowledgeable about the offerings.
That expertise is critical for services such as remote-deposit capture, named by survey respondents as the top product they plan to offer over the next three years. Middleman said the cost to implement RDC varies, with some licenses costing as much as $1,000. But the most important expense, he said, is training staff to be able to provide ongoing technical support to business members.
The opening up of more market share could mean more revenue streams from business online banking, Middleman said. However, he added, a CU may have to spend in the five figure range to have capabilities such as accounting and payroll, a reality that may exclude some smaller CUs. Positive pay, which allows businesses to review checks and transactions before they post to an account, is a much more sophisticated offering and was the least offered service among survey respondents. Middleman said the service is typically ideal for larger entities like city and county offices.
Even though sweep and cash management and account analysis get a lot of press, there are alternatives, Middleman said. A CU could pay interest on a checking account, eliminating the need to sweep into an interest-bearing account. Business online banking is a viable option for credit unions that don't want to invest in an account analysis system, he said.