Headwinds challenge business membership growth
Credit unions may be ready to serve business members, but fintechs and other non-traditional financial institutions aren't going to make it easy.
Business banking for credit unions comes with a promise and a warning: disruption and disintermediation are rife. According to Javelin Advisory Services, reports Lee Wetherington, senior director of corporate strategy for CUES Supplier member Jack Henry, Monett, Missouri, credit unions and other community financial institutions have seen their share of primary business banking relationships “shrink from 28% in 2018 to 16% in 2022—an astounding 43% drop.”
Statistically, based on analysis by Autobooks and Segmint, between 13% and 35% of member checking accounts belong to people trying to run a small business, Wetherington says. That’s a lot. But if they can’t get what they need from CUs, they turn, not to banks in many cases, but to third parties like PayPal, Intuit, Block (formerly Square) and neobanks like Grasshopper, Bluevine and Revolut that facilitate a wide range of payments—check, card, ACH, wire. These relationships can include lines of credit.
“That creates a blind spot for CUs and unnoticed deposit attrition,” he points out.
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