How Can U.S. Credit Unions Succeed in the Small-Business Space?

Boston, MA, February 6, 2008 – A new report from Aite Group, LLC explores the successes and weaknesses of the top 1,200 U.S. credit unions in the small-business space. The report also examines the steps several credit unions are currently taking and plan to take over the next 24 months in an effort to win the business of this important segment. Based on the results of a survey of 101 credit unions - all with more than US$100 million in assets - this report is part of a larger Aite Group study of 201 U.S. credit unions, and the third in a series of reports on this market segment.

Credit unions are challenged by thin margins, more demanding members, and the need to identify new ways to grow deposits, and they increasingly find themselves competing head-to-head with banks. In looking for ways to shift away from traditional strategies and to broaden their product portfolios and member bases, many are recognizing the large opportunities that exist within the small-business segment. Of credit unions surveyed, 68% stated that they are currently focusing more attention on building up their business banking product/service offerings than in the past. Despite their increased focus on this space, few are seeing a great deal of success or penetration within the small-business customer segment. In fact, Aite Group estimates that only about 9% of small businesses consider a credit union to be their primary institution.

"Success in the highly competitive small-business space requires not only investing the time and money necessary to understand the needs of these businesses, but also offering the right products and online capabilities to meet the demands of more than simply mom-and-pop businesses," says Christine Barry, research director with Aite Group and author of this report. "Many credit unions are at a crossroads: Most recognize the opportunities associated with targeting the small-business segment, but the level of importance and effort they plan to allocate to attracting small-business membership divides them."

This 30-page Impact Report contains 26 Figures. Clients of Aite Group's Wholesale Banking services can download the report.