This is a tougher question than it might seem at first. Most business banking solutions focus on entitlements for different user roles and a wide array of options for individual and batch transfers. Is that enough? If not, what’s missing?
Below is a simplified view of the money cycle for a small/medium business.
1. Provide a Service/Product
2. Send Invoice
3. Get Paid
4. Money is deposited into member account
5. Receive Invoice
6. Money is pulled from member account
7. Pay Invoice
8. Repeat
Current business banking addresses one step in the cycle: pay the invoice. Everything else is managed outside of the credit union. Maybe that’s ok. Focus on payments and let the members use outside services for the rest of their needs.
The tough question is where to draw the line. What services makes sense for the credit union to provide and what should be left to fintech’s who want to compete with the credit union, take away business, member attention and assets from the credit union.
Unless the credit union is losing the assets to a fintech provider, any approach will result in money deposited into the credit union and then withdrawn from the credit union. The credit union is fundamental to the money cycle. We can build on this.
For a medium size business we are not going to replace QuickBooks anytime soon, but for a small business the credit union can be a great solution if it covers all the steps in the money cycle.
There are many advantages for both the member and the credit union. For the member: one login, a unified view of finances, better cash flow and faster and more convenient operations. For the credit union: member and asset retention, beating the fintechs, potential for more fees, a higher profile with the member, deeper insights into the members financial situation, more member interaction, time and attention.
The alternative is to appeal to much larger companies and make increasingly sophisticated and complex options for batch transfers and charging fees.
Author: Chris Doner, Founder & CEO, Access Softek