Credit Unions Design New Microbusiness Services

At the smallest end of the small business continuum are microbusinesses — from food trucks to lone photographers — typically sole proprietorships pulling in $250,000 to $1 million per year in revenues. That may not sound like much to the world of impressive deals and dollars amounts, but microbusinesses are a red-hot opportunity on the radar of financial institutions (FIs) and payments platforms these days. Microbusiness seems poised to be the next big thing.

The Credit Union Innovation Playbook series, Microbusiness Opportunity Edition, a PYMNTS and PSCU collaboration, analyzes this quadrant of the financial sector as it pertains to burgeoning microbusinesses, and the financial institutions crafting solutions for their needs.

Surveying 100 credit union (CU) decision-makers “… to learn more about how they consider microbusinesses’ needs when designing and implementing their innovation agendas as well as how those agendas differ among CUs of different types and sizes,” the new Microbusiness Opportunity Edition of the Credit Union Innovation Playbook series contains a wealth of insightful data on CU support for embryonic businesses that undergird the U.S. economy.

Digital Banking Meets The Micro Moment

A good number of credit unions cater to microbusinesses, and those offerings are expanding as the sector and its revenue potential come more clearly into focus.

“Many credit unions say microbusinesses are a top consideration when crafting their innovation agendas,” the Tracker states. “Our research shows that 40.8 percent of CU executives plan to increase the number of products designed with microbusinesses in mind. The share is even higher among small CUs, as 55.3 percent aim to introduce more microbusiness-focused products in the future. Just 32.7 percent and 27.3 percent of mid-sized and large CUs, respectively, say the same.”

Major insights contained in the June Microbusiness Opportunity Edition of the PSCU Tracker include the fact that microbusinesses are interested in digital banking, which is being engineered in many cases with microbusinesses in mind. Certain CUs are taking notice.

“Credit unions with member bases significantly composed of micro-businesses are more likely than other CUs to plan to offer digital banking innovations, such as mobile banking options and digital wallets, over the next three years,” the Tracker states. “Our survey reveals that 66.7 percent of microbusiness-focused CUs plan to innovate new mobile banking capabilities in the next three years, compared to 51.6 percent of credit unions for which microbusinesses do not constitute significant portions of their membership. We also found that 61.1 percent of microbusiness-focused CUs plan to innovate digital wallet solutions, compared to only 37.5 percent of those without many microbusiness members.”

From Insight To Product Launch

The pairing of microbusinesses with credit unions mindful of their unique needs is trending toward a level of CU specialization that blooming microbusinesses will find useful.

“Small credit unions and those with many microbusiness members are likelier than other CUs to plan on innovating new products for such businesses in the future,” according to the June Microbusiness Opportunity Edition of the PSCU Tracker.

“Our research shows that 40.8 percent of all CUs plan to expand the number of products and services they offer micro-businesses over the next three years, while 55.3 percent of small credit unions aim to do so. We found that CUs with significant contingents of microbusiness members are even more likely to plan microbusiness-oriented innovations, with 80.6 percent intending to do so.”