Approximately 20% of credit unions believe they are now better positioned to grow their penetration in the small business space than they were prior to the start of the financial crisis a few years ago.
Aite Group revealed that forecast in a new report, “The Small Business Strategies of U.S. Credit Unions.”
The data also showed that 17% of credit unions believe small businesses will comprise between 11% and 30% of their total member base three years from now, compared with only 4% that have achieved this to date.
Still, business members represent a small percentage of credit unions’ total member base with less than 10% of the membership for approximately 62% of survey participants. In many of those cases, the percentage is less than 5%.
Aite said it surveyed 83 credit unions primarily among the top U.S. 1,000, as they tend to be the most active users of technology within the industry and are the most likely to serve small business members.
Three factors are driving the focus on building up member business services. The regulatory environment has led some credit unions to compensate for expected losses in fee-based revenue resulting from new and proposed industry regulations by identifying new revenue streams. Business banking may be one channel to consider, Aite reported.
Another driver is the slowdown in membership growth, the firm offered. While 92 million Americans are members, the rate of growth has declined over the last few years. Aite said under- small business and Gen Y segments are still under-penetrated markets.
Credit unions have also shifted their attention to business services because the gaps between what small businesses need and the products and services being offered to them by their financial institutions remains wide.
This gap can create a market opportunity for those institutions armed with the right tools to serve them, Aite said.
The tools that may help credit unions build their business service presence include remote deposit capture, online business banking applications, mobile banking and social media, according to the report.