JACKSONVILLE, Fla. — Credit unions have a significant opportunity to expand their share of the small and midsize business banking market, but many will need to rethink their approach to compete effectively, according to a new report by Cornerstone Advisors commissioned by banking technology provider Nymbus.
The report, Winning the Business Banking Market: A Strategic Blueprint for Credit Unions, surveyed 1,249 business owners and senior executives and found that businesses are increasingly willing to change financial institutions in search of better digital capabilities and industry-specific expertise.
According to Cornerstone Advisors and Nymbus, credit unions currently serve as the primary business banking provider for just 5% of the market, despite having additional capacity to expand business lending.
The Key Findings
Among the report’s key findings:
- Eight in 10 business owners said they would seriously consider switching to a financial institution that offers products and services tailored specifically to their industry.
- Nearly one-half of businesses said they are somewhat likely to switch their primary banking provider within the next one to two years.
- Twenty percent of respondents said they are already actively looking for a new primary financial institution.
- Forty-one percent said a digital banking platform comparable to or better than their current provider’s would be the leading factor in moving their business banking to a credit union.
- Approximately three-quarters said they find it believable that a credit union could develop deep expertise in their specific industry.
- Nearly three-quarters said having banking, payments, invoicing, cash-flow forecasting, accounting and payroll integration within a single platform would be extremely or very valuable.
- One-third said they would consider switching financial institutions to obtain those integrated services.
- More than seven in 10 said they would pay for a platform that reduces the time and complexity involved in managing their financial operations.
The report argues that many credit unions have failed to capitalize on the opportunity because they continue to treat business banking as an extension of their consumer banking operations rather than as a specialized business line.
It’s Not About Loyalty
“Businesses in this segment are not loyal to the big banks. They stay because, until recently, they had no real alternative,” Ron Shevlin, chief research officer at Cornerstone Advisors and lead author of the report, said in a statement. “That is the opening for credit unions. The ones that build genuine expertise in a specific industry, and back it with the right digital experience, will offer something the megabanks and the fintechs cannot easily copy.”
Shevlin added that while interest rates can be quickly matched by competitors, developing deep knowledge of how a particular industry operates creates a longer-lasting competitive advantage.
MSUFCU CUSO is Cited
The report cites Michigan State University Federal Credit Union’s business banking brand, Pillur, as an example of the strategy. Built on the Nymbus platform, Pillur focuses on providing business owners with integrated tools such as invoicing, multi-user account access and role-based permissions.
“We wanted to make sure we had both a product mix and an actual service mix that made it usable,” Ami Iceman-Haueter, chief experience officer at Michigan State University Federal Credit Union, said in the report. “You can do the day-to-day management of your business from our platform without needing to log in and out of several different systems.”
Nine-Part Blueprint
Cornerstone Advisors and Nymbus said the report outlines a nine-part blueprint for credit unions seeking to expand their business banking operations. Recommendations include:
- Selecting a single industry vertical and developing specialized expertise.
- Focusing first on existing business-owning members before pursuing new commercial customers.
- Emphasizing cash-flow management services rather than primarily marketing loans.
- Investing in technology designed specifically for business banking instead of adapting consumer banking platforms.
“This research confirms what many of us already sense: business banking is a massive opportunity, and credit unions are well-positioned to capture it,” Jeffery Kendall, CEO and chairman of Nymbus, said in a statement. “The opportunity is real, it’s sized, and it’s winnable. My call to every financial institution leader: stop letting legacy cores hold you back, and start treating business banking as the strategic priority it is.”
Cornerstone Advisors said the report is available as a free download. Nymbus, founded in 2015, provides cloud-based banking technology platforms for community banks and credit unions designed to modernize legacy core systems and support both branch-based and digital-first financial institutions.
