About 10% of small businesses have switched financial institutions during the past year, according to Leigh Sherman of Cornerstone Advisors.
“Small businesses are leaving megabanks because the owners are concerned about future access to credit,” Sherman notes. “They’re feeling alienated by megabank mergers that result in poor or inconsistent service. This represents an obvious opportunity for credit unions.”
And the opportunity is large. Consider that:
“It’s a fallacy to assume loans account for most of the profit of a small-business relationship,” Sherman says. “In fact, deposit services account for about 60% to 70% of the profit.
“In the small-business relationship, the credit card is trump,” he continues. “Credit cards fund more small businesses than traditional bank loans because of the convenience factor and the 30-day float. About 60% of small businesses use credit cards to finance basically everything.
“And the use of social media is growing exponentially among small-business owners. Many business owners use Facebook and Twitter instead of developing their own websites.”