A growing number of consumers are abandoning traditional checking accounts in favor of higher-yield alternatives. In the 12-month period between June 2017 and June 2018, consumers withdrew more than $30 billion from non-interest earning bank accounts in the U.S. This trend leaves many credit unions challenged to maintain liquidity and unable to leverage their cheapest source of funding for loans. In today’s environment, one strategic deposit-building move may be to focus on increasing commercial accounts by implementing a merchant services program. As a non-interest income generator, a quality merchant services program can help credit unions grow their commercial book of business and their deposit base.
With a merchant services program, credit unions have a tremendous opportunity to gain deposits from retail stores, hospitals, hotels, restaurants, public works, and other businesses that regularly accept payments during their day-to-day operations. Many of these industries are thriving. For example, in 2018, restaurant sales were expected to hit $825 billion and total American hotel industry revenue was projected to reach $200 billion. Additionally, annual U.S. retail sales are expected to top $6 trillion by 2022.
Today, credit unions have only captured 3% of the small to medium-sized business market. A strong merchant services program can help increase this market share — especially among the two-thirds of small business owners surveyed by ATH Power Consulting who said they would consider switching to a new banking provider if it offered products and services to help them better manage and grow their operations.
A quality merchant program offers real benefits to a credit union’s deposit base and revenue goals. While not guaranteed, data from merchant services provider Elavon suggests members that utilize its solution have deposit balances on average two times higher than members with just checking accounts. Revenue-wise, these members generate three times more than their checking account-only counterparts. These members are also typically “stickier,” averaging three solutions with their credit union compared to an average of two solutions among those with only checking accounts.
Partnering with Elan Advisory Services
Elan Advisory Services can offer expertise on commercial deposit growth strategies, including how to capture more commercial members with a merchant services program. Credit unions that engage with Elan Advisory Services have access to Elavon, one of America’s leading merchant solution providers. Elavon offers a range of software solutions, mobile and tablet-based solutions, ecommerce offerings, POS terminals, and loyalty programs designed to meet the needs of numerous merchant industries. Boasting a best-in-class onboarding process, Elavon provides a concierge service that is focused on decreasing the number of days to activation, thereby increasing the speed to earning revenue. The member experience is further enhanced through beneficial program features such as loyalty programs, same-day funding, reporting tools, and robust security.
To learn more about building deposits with a merchant services program, click here to download a complimentary whitepaper.
About Elan Advisory Services
Elan Advisory Services provides strategic consultation to ensure your credit union has the right products and services to compete in your market. Through Elan Advisory Services’ internal partners, we deliver best-in-class products and exceptional service to more than 3,000 financial institutions across the United States. With solutions such as end-to-end agent credit card services, mortgage services, and merchant processing, Elan Advisory Services can help your credit union increase revenue and efficiencies. For more information, visit Elan Advisory Services at www.elanadvisoryservices.com.