Today, community banks and credit unions are in a race for small business customers, who make up 99.9 percent of all firms in the United States.
Many institutions, having seen a massive shift in borrower behavior throughout the pandemic, are feverishly reviewing their current lending processes and beginning their digital transformation journeys.
By investing in technology like modern loan origination systems, these institutions are not only meeting borrowers' changing expectations of service, but they’re also bringing massive efficiency gains to their small business lending segment. In fact, in a recent review of customers, those leveraging Numerated’s loan origination system were able to process upwards of four times as many loans vs. their manual, legacy processes—without adding any additional human or marketing resources.
And while reimaging business lending will be key to success in today’s digital world, equally as important is capturing business deposits.
Unfortunately, business deposits are highly sought after and, therefore, incredibly hard to come by. That’s because, once a customer has decided to bring their business accounts to an institution, they become incredibly sticky. In fact, as Regions Bank recently discovered, even rate hikes from the Federal Reserve aren’t enough to send deposits scurrying for the door.
One reason a small business might be reluctant to move their deposit accounts to a new institution is because of how difficult it can be to open a new deposit account at most banks and credit unions.
Unlike consumer deposit accounts, business deposit accounts are incredibly complex, require manually filling out applications at most institutions, and require a significant amount of paperwork to satisfy Know Your Customer/Know Your Business standards.
A business subjected to a manual deposit account opening experience will need to physically travel to a branch during business hours and bring with them their personal identification (as well as the personal ID of co-owners), their employer identification number, details about their business such as their address and trade name, and any applicable organizing documents and agreements.
For the simplest business—a sole proprietorship—the deposit account opening experience is relatively easy and can be completed in just a day or two. But, as the Motley Fool recently reported, just 10 percent of the nation’s 31.7 million small businesses are sole proprietorships.
That means the overwhelming majority of small business owners are going to have a more difficult time opening a deposit account and can expect a lengthier process. That’s probably why when small businesses Google “how to open a small business deposit account” they’re directed to articles like this one from NerdWallet, which points the reader directly to megabanks and alternative lenders with digital account opening, dismissing community institutions altogether.
If community banks and credit unions want to compete for these high-value deposits, they’ll need to address the bottleneck their manual, legacy deposit account opening processes are creating for business owners.
Numerated has worked with over 140 community institutions to transform the way they lend to businesses, and we’re now bringing that award-winning experience to Digital Account Opening for Businesses.
Leveraging pre-filled and dynamic applications, purpose built for the complexities of business banking, we’re able to cut out upwards of 75 percent of the work associated with opening a new deposit account for a business, including satisfying high KYC/KYB standards.
To learn why more than 30,000 users and over half a million American businesses love the Numerated experience, watch our on-demand June 28 webinar for a full demo of Digital Account Opening for Businesses.
