BOSTON — Even as more credit unions are reaching out to the small business market, a just-released Aite Group report revealed that only 9% of small businesses consider them their primary financial institution.
The report, How Can Credit Unions Succeed in the Small Business Space, surveyed 101 credit unions with more than $100 million in assets. Eighty-one percent of respondents said they do not have a dedicated small business banking offering and instead, offer small business customers a retail banking solution. But 68% said they are currently focusing more attention on building up their business banking products and services than in the past.
According to the report, credit unions are seeing the bulk of their success with micro businesses that generate between $101,000 and $500,000 in annual revenues. Seventy-six percent said this segment is their sweet spot. Of the credit unions surveyed, more than 50% have member bases consisting of less than 10% of businesses.
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Interestingly, 16 of the top 30 banks do not consider credit unions to be as big of a threat as perceived. Fifty-six percent of banks said they do not pose a competitive threat. But the 45% of credit unions that said they plan to target larger businesses going forward may change how banks feel now about competition, said Christine Barry, research director at Aite Group and author of the report.
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