Credit unions have long been distinguished by their personal, community-oriented approach, fostering trust and strong member relationships that set them apart from the large, impersonal banks. This close-knit engagement has been a significant competitive advantage. However, in today’s rapidly evolving financial landscape, credit unions are increasingly confronted with challenges that mirror those faced by traditional banks.
A major shift in member demographics is underway, as younger generations—who prioritize seamless digital experiences—become a larger segment of the membership base. In addition to this generational shift, credit unions are also seeing growing demand from their corporate and SME members, who expect more advanced financial services and digital tools to support their business needs. This, combined with heightened competition from fintechs and banks, tough macroeconomic conditions, and rising regulatory burdens, is prompting credit unions to adapt and evolve. As a result, credit unions are now looking at diversifying revenue streams and loan portfolios, and making forays into corporate banking. And as they do so, they must focus on leveraging technology to meet the evolving needs of their corporate members too, with processes like corporate fee billing becoming essential to their success.
The Corporate Opportunity for Credit Unions
Credit unions have been demonstrating steady growth since 2018.1 Loans have been increasing at an annual rate of 8.8 percent while bank loans have grown at 8 percent. Deposits at credit unions have grown by 9 percent annually, compared to the 8. 9 percent deposit growth rate at banks. But returns on assets declined by 23.5 percent, fueled by high operating costs, stagnating fees, and increasing bad loans. Many credit unions are considering moving or are already in the process of catering to their business (SME and corporate) members. And the timing couldn’t be better. Many small and medium businesses are optimistic about becoming a part of a credit union because they believe credit unions understand their needs better and have better community support. 4 percent of businesses consider credit unions to be their main financial institution while the number of small and medium businesses that are members of credit unions has increased from 6 percent to 9 percent.2 And interestingly, 31 percent of businesses that work with leading banks, are open to switching to credit unions if they get comparable solutions that meet the unique requirements of their small business.
As they expand operations to include corporate members, credit unions must also fast track their digital transformation process. This is crucial for updating and modernizing processes and services, and delivering the kind of technology powered, innovative services that today’s business customers expect from their financial services partners. As part of this, they must focus on implementing a modern and robust corporate fee billing product.
The Value Delivered by a Robust Integrated Corporate Fee Billing Product
Once considered a basic operational tool for managing invoicing and billing, modern corporate fee billing, also known as account analysis in the U.S., can be a powerful differentiator for credit unions amidst increasing competition from banks and fintechs. Most businesses want to be able to improve their liquidity management and cash forecasting capabilities. A robust corporate fee billing or account analysis solution that is entrenched into every stage of the member life cycle can collate data from disparate sources and offer real-time insights into account information to help businesses manage their liquidity and cash better.
It can help the credit union streamline their member lifecycle management efforts to improve operational efficiency, plug revenue leakage, and ensure a data backed and personalized experience for corporate members. Here’s how:
- Negotiate: This is the first critical step in a deal and corporate fee billing must be integrated into the deal management process right from this stage. This will equip credit unions to evaluate new members, model possible scenarios, and even access third-party data to ensure competitive pricing and offers. They can access workflow tools to shape offers that make financial sense for both parties, negotiate effectively, and manage approvals seamlessly.
- Implement: By integrating corporate fee billing into the deal management process, credit unions can ensure that information regarding the deal is not stored in silos and effectively communicated to relevant teams. Information regarding discounts, offers, and member commitments must be effectively communicated to implementation and billing teams to ensure that they are tracked and members invoiced accurately. A robust corporate fee billing system can help them capture all relevant details to ensure automated deal implementation and prevent revenue leakage.
- Price: Credit unions can effectively price products and services accurately and according to negotiated terms as the system holds all the details of the deal as well as updated pricing and offers to ensure consistent application across transactions.
- Analyze: With an integrated corporate fee billing system, credit unions can track member commitments, automate transaction analyses, and process data in real time to improve speed and accuracy.
- Bill: The system can create statements in different formats as per member requirements and are usually equipped to handle multi-currency and multi geography requirements as well. Credit unions can also leverage the system to offer self service capabilities to members.
- Settle: A powerful corporate fee billing system can help credit unions offer a wide range of settlement methods, automated processes for handling queries and managing disputes. This ensures that any issues with invoices are handled efficiently, accurately and swiftly.
- Renew: With corporate fee billing integrated into the member lifecycle, credit unions can ensure that deals are reviewed and renewed well before they expire. This is crucial, as delays in renewals can result in members continuing outdated pricing, resulting in revenue leakage. The system must also track contract durations and member commitments and alert relevant teams when it is time to renew.
Transforming the Technology Foundation
The question is, how can credit unions integrate corporate fee billing into their member lifecycle management processes? The fact is that most credit unions must accelerate their digital transformation journeys at this juncture to keep pace with the digitalization effort sweeping across the financial services sector. They must be able to deliver the kind of technology-backed innovation and on-demand services their members expect. The good news is that they don’t have to overhaul their legacy systems to integrate corporate fee billing. They can simply work with an experienced partner who can deploy a cloud-native, microservices-based solution over their legacy cores as an agile middle layer. Such a platform can integrate easily with varied processes and systems to embed corporate fee billing into every stage across the member lifecycle.
Credit unions are at a crucial juncture in their journey with changing member demographics, evolving expectations and needs on one hand, and increasing competition on the other. Most credit unions are already looking at expanding their corporate membership to protect revenues. A comprehensive corporate fee billing function, deeply integrated with the member lifecycle will help in delivering the real time visibility into liquidity and cash forecasting that businesses need. And it will improve their management of the member lifecycle to ensure efficiency, customer loyalty, and profitability.