BROOKFIELD, Wis. – When it comes to capturing the small business market, Mark Sievewright says credit unions should get GLAD.
Meaning, "grant loans and attract deposits," explained the senior vice president at Fiserv, Inc. the technology solutions giant. Neither is more important than the other but in the banking industry, he's found that free deposit accounts attract more business, he said. There's not enough penetration in the credit union market to determine if that is the case here, he pointed out, but some commonalities are present.
"The battleground for deposits is extremely intense," Sievewright said. He noted that the negative savings rate isn't helping either.
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Both credit unions and banks are being challenged with an interest rate environment that has put the squeeze on margins, Sievewright said. One factor that will make each stand out within the small business community is a zealous focus on the relationship.
"Some of the battlegrounds will be in delivery channels," he said. "A small business owner may have his or her own accounts at a financial institution different from where the business account is. It is incumbent on the credit union or bank to win over the entire relationship."
While there are 45% fewer banks and credit unions than there were 20 years ago, the number of branches have doubled, Sievewright said. To small businesses, the branch will probably continue to be the favored point place, but new technologies like remote deposit capture, which can process checks without physically being in the branch, may be the lure for busy small business owners.
"The question will become how do we evolve the branch over time to make sure it is integrated with the call center [and so forth]," Sievewright said. "The challenge is to make the online channel as rich as the branch channel."
Having the expertise in the branch will also continue to be critical.
"You simply can't get into small business services by hanging a sign on the door," Sievewright said. "The right staff is important for execution. It's just like baking a cake without flour. It's not going to happen." [email protected]
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