Seek account management features that drive adoption and deposits. At the average community financial institution, 13-35% of retail accounts are being used to run small businesses, according to a Jack Henry survey from earlier this year. Many are solopreneurs involving only one person. There are 59 million freelancers, gig workers and sole proprietors in the U.S. – accounting for the majority of small businesses.

For these smaller enterprises, retail banking solutions are attractive for their ease of use, but they do not provide all the transactional capabilities that businesses need to run their operation. Yet, commercial banking solutions are often overkill and too complex for the needs of small businesses and solopreneurs.

Still, small businesses, freelancers and entrepreneurs need ways to accept payments from customers, invoice employees or vendors, manage cash flow, apply for credit, manage taxes and more. Rather than attempt to manage finances through a personal account, credit unions should give members a way to set up a separate business account, which can then be accessed alongside their existing personal account using a single set of credentials.

Similarly, businesses should have the ability to add accounts from other institutions to digital banking, making it easier for entrepreneurs and business owners to manage their finances from one place. In addition, it should be easy for members to invite other users or administrators to the account, as well as manage user permissions. All of these capabilities will help credit unions drive digital engagement and generate meaningful deposit growth.

Avoid a one-size-fits-all approach. Businesses have different financial needs, depending on their industry, business model, size and more. From independent contractors and freelancers, to retail stores, commercial real estate companies, service organizations such as dental offices and vet clinics, and large agricultural enterprises, credit unions have an array of opportunities. However, different types of businesses require distinct product and service offerings.

For example, property management and commercial real estate firms face unique challenges that call for tailored banking solutions. In many regions around the country, higher housing costs have made the multifamily market attractive for investors. However, the high cost of maintenance combined with local regulations can negatively impact profitability, which means operational efficiencies are key to a healthy bottom line.

To address this and better serve multifamily property management companies, credit unions can offer products and services tailored to this market segment and incorporate the right features into the digital business banking experience. For instance, integrating real estate services that help property management firms safely manage transactions between owners, renters and contractors can help differentiate their credit union's offerings. Streamlined payment processing for recurring payments like utilities and centralized account management capabilities to service multiple property accounts from a single platform can also help credit unions serve this demographic.

Gyms and retail businesses, such as coffee shops or apparel stores, are another segment credit unions are perfectly positioned to serve with the right business banking offerings. Owners of these types of organizations need ways to accept payments from customers, often electronically, as well as an easy way to manage and track expenses.

For example, a gym owner needs to enable members to pay for memberships, individual classes or even personal training sessions. To maintain profitability and manage costs, the owner could benefit from streamlined expense management features. The ability to track and categorize expenses makes it much easier to monitor and manage costs, especially when facility maintenance or equipment upgrades are needed on a semi-regular or recurring basis.

Ultimately, personalization is just as essential in business banking as it is when serving retail members. By differentiating the digital banking experience across various market segments, credit unions can better compete and win the loyalty of member businesses throughout their communities.

Be flexible enough to adapt. Amid ongoing economic uncertainties, including the potential for additional interest rate hikes, stubborn inflation and the rising cost of capital, it's increasingly important for credit unions to remain flexible and digitally responsive to their business members' changing needs. The right technology investments and IT infrastructure can facilitate this.

From July 2020 to July 2021, 43% of businesses have increased their use of online banking services via computers or tablets, and 40% used more mobile banking services, survey data from Ernst & Young revealed. In contrast, 38% of business owners said they decreased their visits to branches and offices, and 24% reduced their use of ATMs.

Given the shift to digital, credit unions need easier, cost-effective ways to deliver feature-rich digital banking experiences for their business members. When considering partnerships with any solutions provider, whether it's a potential digital banking or core processing vendor, make sure their platform is flexible enough to support ongoing product innovation. Look for a partner that can support integrations with various third parties that help business members manage services like payroll, accounting systems and invoicing.

Grow Deposits and ­Relationships With Business Members

According to a recent study from Jack Henry, serving small and medium-sized businesses is a key priority for most financial institutions this year, with 65% indicating plans to expand their institution's SMB offerings. For credit unions to differentiate themselves, and attract business members and generate deposit growth in this space, the right technical capabilities and partnerships will be key.

Michael Duncan

Michael Duncan CEO Bankjoy Royal Oak, Mich.