Just a few short years ago debate swirled over which of the three primary mobile banking access modes – SMS (text messaging), mobile browser or downloadable application – would emerge as “the winner.”
Many early mobile banking implementations focused only on one access mode, often a downloadable application for smartphone users. This limited approach prevented credit unions from capitalizing on the full potential of the mobile channel, as it narrowed not only the field of possible mobile banking users, but also the availability of features and functionality.
Today, it is widely acknowledged that different members want to access mobile financial services in different ways. In addition, emerging capabilities sometimes dictate the use of certain access modes – such as remote deposit capture, which can only be facilitated via a downloadable application. As a result, the majority of current mobile banking implementations support all three mobile access modes, and all three are likely to coexist for some time.
As with mobile banking, there is risk in assuming that the future mobile payments ecosystem will be a neat, “one size fits all” proposition. Currently, many mobile payment technologies are tied to one funding account. This is only a stepping stone to an eventual end state that is being referred to by many in the industry as a “virtual wallet.”
Envisioned broadly, a “virtual wallet” strategy could empower a member to choose from among a wide variety of account relationships. Members visiting a home improvement or electronics store might want to access their money market account or home equity line of credit to fund their purchases instead of using their household checking account.
And, in addition to making purchases at the point of sale, members will want to pay bills and make P2P and remote merchant payments using their mobile devices. Members have already come to expect that the mobile channel will enable a wide range of transactions via a device they hold in their hands. Making this a reality will require access to broad payments networks that can support varied transaction types.
To that end, it may be wise for credit unions to pause and think beyond bolting on another piece of mobile software or a chip to handle payments. By taking a look at the wider landscape, credit unions can develop a mobile strategy that considers enabling deposits, payments and other transactions as part of a holistic user experience. That strategy should be imagined with an eye on the future so that as the mobile channel evolves, new capabilities can be seamlessly added to the product and supported.
Part of the value proposition for a digital wallet that resides on a mobile device is that mobile devices facilitate interaction between credit unions and members, and merchants and members. Members have their mobile device with them at almost all times. Offers and messages are readily available without the need to print coupons, and can be targeted by location when appropriate.
In addition, because the mobile payments instrument is stored digitally, it is easily shut down in case of compromise or theft. It may take days for a member to realize his or her credit card is missing, whereas they will likely miss their mobile device much sooner. And, since there are validations nested into mobile payments processes, fraud and identity theft are impeded. All of this adds up to added value for the member, a key to driving adoption and usage.
Given the rapid evolution of mobile financial services, it is not too early to begin thinking about mobile payments as an extension of your credit union’s mobile banking strategy.
Ask questions to determine if the mobile banking technology your credit union is investing in today has the potential to support mobile payments in the future.
Determine if it is best to add point solutions or implement a mobile platform that can accommodate multiple methods of delivery and also manage content inclusive of images, messages, coupons and transactional data. By making informed decisions now, you can reduce the risk of being left behind in the future.
Calvin Grimes is mobile solutions manager at Fiserv Inc. of Brookfield, Wis.