TMG on the Future of Mobile Payments
The Members Group, in a wide-ranging webinar, offered up a provocative view of a banking future that in lots of ways challenges every idea credit union executives hold.
He pointed to Google, possibly Apple, certainly PayPal as aggressively on the hunt for thickening slices of the payments pie. To compete in a complex payments marketplace, said Day, “credit unions need to look at creating new value for members and merchants.”
Above all, said Day, credit unions need a compelling mobile banking and mobile payments strategy. “Mobile is the key technology for future growth,” said Day. He highlighted data that shows mobile banking is of high importance to Gen Y and, without that younger demographic, credit unions literally have no future. “As an industry, credit unions are not doing a great job attracting a younger demographic.”
“Gen Y is adopting smartphone technology. Nearly two-thirds regularly access the Internet with a mobile phone. Many value mobile banking more than online banking,” said Day.
Another challenge ahead for credit unions, said Day, is that historic revenue streams are dwindling. “Loan demand is decreasing. There was the pressure on debit interchange fees. There may be attacks on credit interchange. And there’s a challenging regulatory environment,” he said.
And then there is the revolution that is transforming payments from something that happens with a plastic card to something that happens with a mobile phone. “We are going through an intense period of innovation in payments,” said Day, adding that what shapes the revolution are three Ps: “Presence, preference, payments,” all of which can revolve around a smartphone that knows who the consumer is, where he or she is, and how they want to pay for this transaction now.
Plentiful opportunities exist for credit unions amid this rapidly changing environment, stressed Day, but he stressed that institutions need a mobile wallet strategy, an alternatives payment strategy, and “they need to think beyond the swipe.”
Day acknowledged that for credit unions that have prized themselves on their person-to-person skills with members it is wrenching to conceive of a world where at least some members want never to set foot in a branch. But, said Day, that doesn’t mean there isn’t relationship - “build digital relationships.”
Do that and embrace mobile banking, he suggested, and credit unions will have a bright future.