4 Ways to Improve Business Services Technology
It's no surprise that small businesses are becoming more sophisticated and savvy in their use of technology to expand their businesses – and they’re expecting their credit unions and banks to keep up with their demands.
According to the National Small Business Association's 2013 Small Business Technology Survey, 74% utilize a smart phone, which is up from 57% in 2010. There was a marked increase in usage of laptops, from 67% in 2010 to 84% today.
The NSBA said it surveyed more than 800 small business owners.
Eighty-three percent of the survey's respondents manage their bank account online, 72% pay bills online and 44% manage their payroll online as well.
CU Times asked CUSOs and credit unions what they were doing both on the back end and for their respective clients and members to keep up with the growing list of technology demands and to discuss some of the entry barriers.
“In our short ten year CUSO life, we’ve seen business application information go from about 10% electronic to 80% electronic. For this reason, we’ve invested in technology that makes information submission more secure and accessible both to our credit unions and their member business borrowers.
We offer a complimentary encrypted email portal, and a secure cloud based application submission and messaging system that allows business lenders at the credit unions to have an easy way to transmit sensitive member information and access to real time application status.
In loan processing, time and clear communication are often the difference between winning and losing new loan opportunities. The credit unions that use these systems generate substantially more closed loan volume than those who use less advanced submission and messaging methods.
As a third party service provider we have to be at the forefront of information security and convenience and we’ve recently completed a core conversion to make the information we maintain for our credit unions more compatible with the credit unions’ core systems.”Bill BeardsleyPresidentMichigan Business Connection LC, Ann Arbor, Mich., Serves more than 36 credit unions
Read more: Kent Moon, Member Business Lending LLC
Technology for small business support through credit unions is still in the formative years. Most of the technological development has centered on the deposit side of small business support.
Remote deposit-capture, ACH payment processing and small lines of credit for working capital support. These are the primary areas that credit unions have been focusing on. Unfortunately, advanced technology development for risk assessment has been slow in its evolution. There are currently some software companies that are developing programs that accumulate, analyze and document loan requests at a quicker pace than has been historically possible.
These software programs are however still in the early stages of development and are reportedly difficult to set up and use. Soon however, I believe that these program developers can and will develop programs that will virtually remove the human factor in the loan approving and extension process. When will that be – soon.
The biggest challenge in small business capital support is developing a system that can handle a large volume of small loan balances with high efficiency that make the cost of the technology economically feasible.
There are some large financial institutions, because of their size, that are closer to evolving the type of technology that meets the economies of scale requirements.
Currently, we are watching a race in technology development. Who will win: the one with the simplest, quickest and most accurate program. The market will tell us when that happens because it will be like the stories of Steve Jobs or Bill Gates; the mammoth success will be obvious.”Kent MoonPresident/CEOMember Business Lending LLC, West Jordan, Utah, Serves more than 70 credit unions
Read more: Julie Thomason, Alabama Telco Credit Union ...
It's no secret that technology is key nowadays in helping a business grow successful. We work hard to stay on the pulse of technology by offering the latest advancements for our members in terms of online and mobile banking. We suspect our business members want to do the same for their customers, which is why we offer multiple types of merchant services to help businesses do just that. And as they grow, so do their lending needs and the need for utilizing our technology to make business banking easier and more convenient.
The growth starts off small and slow but quickly builds. A small startup may be looking to market itself online and needs a way for their customers to purchase products online. We step in with our online payment service. The business begins to expand. We offer a portable payment solution so they may be able to accept credit and debit cards for purchases.
They grow even more, expanding to a store-front location. Not quite ready to purchase a location, they lease one. We help them upgrade their card machine and offer a business line of credit to purchase more inventory to fill the space. They now have a need for more employees and a payroll system. We set up a meeting with our payroll specialist to create and design a package suited to them. We also set them up with direct deposit and bill pay to pay their employees. Next, we save them and their employees’ time from running back and forth to the branch to make check deposits via our remote deposit capture. The business is up and running efficiently, growing and ready for a bigger location to own, not lease. They turn to us for a business loan. This is how our products, technology and expertise work together to help small businesses grow.”Julie ThomasonBusiness Development OfficerAlabama Telco Credit Union, Birmingham, Ala., $607 million in assets
Read more: Larry Middleman, CU Business Group, LLC ...
Technology eliminates geographic barriers for both CUSOs and our credit union clients. CUBG started in 2002 and in time, realized that the ability to move data electronically rather than physically meant we could be a national CUSO. Today, CUBG is entirely electronic, allowing us to communicate instantaneously with our 465 credit unions regarding underwriting, loan documents and other timely output.
For credit unions with active member business leding programs, financial analysis software is critical. Credit unions utilize software to crunch the numbers and format the output so the business loan analyst can more easily see trends and understand the financial condition of the borrower. The software automatically calculates ratios and pulls in key information from outside sources to assess the overall risk of the credit request.
Technology comes into play even more for business deposits, which are critical in getting businesses to move their lending and full banking relationship. True business online banking is a central point for information, cash management, and to originate transactions via remote deposit capture, wires, and ACH origination. Allowing electronic movement of cash receipts and payments is essential in winning relationships from more sophisticated small businesses; those relationships will be the most profitable ones at the credit union.
Software and systems are only as good as the people operating them. Information that is inaccurate will not be corrected by fancy software. There are many variables in business lending, and people with the right experience levels are needed for quality control and to manage the risks throughout the life of a loan.”Larry MiddlemanPresident/CEOCU Business Group LLC, Portland, Ore., Serves 465 credit unions