Deborah Peace is CEO of ACH Alert
According to the U.S. Small Business Administration, there are 30.2 million small businesses across the U.S, representing 99.9 percent of the total U.S. business market. Small and medium-sized businesses are economic forces within their local communities, generating employment opportunities and revenue. Credit unions are well-poised to serve these organizations and therefore are increasingly focused on attracting and serving a greater number of commercial and business members. oday’s credit unions have a massive opportunity to attract more business members and address their financial needs. One of those needs is protecting the cash flow of their business, which is more important than ever as a majority of companies, 78 percent, fell victim to fraud last year, according to AFP’s Payments Fraud and Control Survey. However, for credit unions to effectively help their business members protect their hard-earned money and ultimately, grow their own commercial business, they must consider the following:
1) Serve consumer and business members with a single online system
Most online systems used by credit unions today are geared toward consumer members. This can make it challenging for credit unions that are aiming to serve business members. Some credit unions are changing their charters to be able to attract and sustain commercial business and a solid treasury management system is crucial to achieving this growth. Treasury management services like positive pay for ACH and checks are not standard with retail online systems, yet are critical in protecting business member accounts given that business members have merely one day to detect and reject fraudulent transactions, compared to the gracious 60-day window enjoyed by consumer members.
Partnering with vendors that can complement a retail banking system with these services while making them accessible to members with a single sign-on feature can help credit unions overcome this challenge. When looking for a partner for ancillary services, consider how a vendor’s offerings can impact operational efficiencies, as well as the member experience.
2) The wrong solution can actually limit a credit union’s growth
Outdated treasury management and fraud-prevention tools typically burden staff with conducting manual reviews for fraudulent transactions and communicating with the member about any suspicious activity. Labor-intensive processes like these are time-consuming, costly and require additional back office employees to manage – hindering an institution’s ability to quickly respond to market demands. Additionally, such manual processes are not scalable and limits profitability for $25 wire transfers and 25¢ ACH items.
Streamlining the fraud-prevention process to be more scalable to sustain growth and facilitate a better, more transparent experience for members supports improved security as well as better member retention efforts. An actionable online banking system with adequate treasury management tools that empowers members to take action against unauthorized activity requires fewer full-time employees to manage. Rather than manage the manual transaction dispute and return process, employees can spend time on more worthwhile, revenue-generating tasks.
3) Employing inconvenient and time-consuming methods can frustrate members
In the past, credit unions have not typically offered corporate accounts the tools needed to monitor online banking, ACH origination or wire transfers. Meanwhile, for their consumer members, credit unions often manage the dispute process for fraudulent debit card and ACH debit transactions. While these types of fraud can cause losses, they pale in comparison with the losses that can occur on business accounts. This is due to the limited timeframe that business members have to dispute an unauthorized transaction. With only a one-day window for detecting and responding to fraud, every minute is critical.
For this reason, updating to a self-service model and leveraging existing technology that enlists the business member’s participation will be the key in fighting against fraud and remaining competitive as the industry continues to evolve. A modern, self-service approach that uses digital channels encourages members to protect themselves and gain greater control over the movement of their funds. Business members know of suspicious activity before funds leave their account and have a convenient option for authorizing or denying transactions. Corporate members should not have to stop their day to call or visit a branch to dispute a potentially fraudulent transaction. Given today’s technology, members should have the ability to take action against unauthorized activity right from their phone or desktop at their convenience.
By providing corporate members with actionable fraud prevention and treasury management tools within their online or mobile banking applications, credit unions can enhance the level of security offered and improve the digital banking experience. The credit unions that achieve this will successfully attract and retain a larger share of commercial business and gain a significant competitive advantage in a world that is dominated by digital.