From Larry Middleman, CUBG President/CEO
According to the 2015 Temkin Trust Ratings, credit unions collectively rank #1 in trust across all industries, ahead of such recognized national brands like Trader Joe’s and Amazon, and well in front of banks.
In terms of the business market, credit unions have done a good job of serving “micro-businesses”, those entities with annual sales of under $1 million. Fortunately, this is a large group, made up of over 25 million small businesses in the U.S.
This market is easily satisfied with basic financial services, as it typically does not have sophisticated banking needs. But the trade-off is that these really small businesses act much like consumers and thus are not particularly profitable for financial institutions.
In order for credit unions to truly advance in the business market and gain long-term, profitable relationships, they need to move up the pyramid to businesses of $1 – 10 million in annual sales, a group consisting of another 1.2 million businesses. These organizations have more employees, higher cash flows, keep larger account balances, and have a need for more sophisticated financial services.
CU Business Group conducted a focus group survey with such “next level” small businesses. Typical responses included:
“My perception is that credit unions are for personal stuff, and banks are for business.”
“I don’t think credit unions are equipped to handle my business needs.”
It is clear that credit unions have a lot of ground to cover in order to reach this next-level business owner, and truly compete with banks in this lucrative market.