Technology’s 2013 Anthem: We Will Rock You
In just a very few years, credit unions have become persuaded that they need to play in the technology arena. And a related reality is the spreading belief that “technology may allow smaller institutions to very successfully compete against much larger ones,” said Tony Rasmussen, a senior vice president at Mountain America Credit Union, a $3.3 billion cooperative in West Jordan, Utah.
Investing in the right technologies that bring the greatest value to credit unions and members alike is the key. Listen to technology vendors and just about every technology is a must have, but that simply is not so. Many are nice to have but must-haves they aren’t, said experts.
“The technology initiatives that are getting approved are helping credit unions cut costs or bring in new revenue,” said Jack Vonder Heide, an Oak Brook, Ill., technology expert.
What are the must-haves? Interviews with credit union executives and researchers narrowed the field to five tech trends that ought to figure in most credit unions’ 2013 spending.
The biggest, most encompassing trend is mobile banking.
“We have come to the realization that there is a lot of demand for financial services in places where it’s just not practical for us to have a branch,” said William Bynum, CEO of Jackson, Miss.-based Hope Credit Union, a $153 million institution that primarily serves members in the Mississippi Delta. “We pride ourselves on serving the underserved and mobile banking is helping us do that,” said Bynum. “Mobile is the game changer. We expect to double our membership in the next couple years.”
Mobile in fact looms as so transformational for credit unions that it triggers other trends.
It has given rise to mobile-only members, said Rasmussen. “We are seeing a rising number of members who want only to interact with us through the mobile channel.”
That is not always as easy as it sounds. Most mobile banking platforms are parasitic on online banking, using the same username and password. Most will not allow input of new payees through the mobile app. Accommodating mobile only members, who do not use online banking, will require fundamental changes in the mobile banking platform and doing that is emerging as crucial to some credit unions. “We are in the process of strengthening our mobile channel,” said Rasmussen.
Call this early days for the mobile-only trend, but experts suggest that it will gain strength especially with younger demographics who may only have a smartphone. They will want full-featured banking, and they will flock to the institutions that meet their needs.
Next year will see the emergence of innovative, breakthrough mobile banking apps, predicted Eric Feinberg, senior director of mobile at Ann Arbor, Mich.-based research firm ForeSee. Recent findings from ForeSee show “a very tight band” of satisfaction for users of mobile banking apps. There are slender differences between better performing and lower performing apps. “It’s anyone’s game to differentiate,” said Feinberg, who indicated he believed 2013 will be the time when a next generation of more distinctive apps emerges.
Right now, experts acknowledged, mobile banking apps look and behave very much alike. A shared mediocrity has become the norm. None has emerged as a compelling user experience but that is exactly the new target that apps developers will admit they are aiming at and, said Feinberg, he believes that quest will become a top tech trend at least at leading institutions.
Just about every credit union is tripping over itself to make use of social media channels such as Facebook, Twitter, and perhaps Foursquare, but 2013 may be the year when these efforts are held accountable.
It already is happening at $3.1 billion Kinecta Federal Credit Union in Manhattan Beach, Calif., said Shannon Doiron, director of marketing and e-commerce.
Kinecta, he elaborated, maintains a very active presence on Facebook and Twitter and it also has begun uploading educational videos to YouTube. It also is an active advertiser on Facebook.
“We aim to offer people educational tools and information,” said Doiron, who said Kinecta believes “people are turned off by a hard sell on social media.”
Particularly effective for Kinecta have been Facebook calculator apps that let visitors calculate the costs of a car loan or home mortgage on the fly, inside Facebook. “We’ve gotten great response,” said Doiron.
He cautioned that Kinecta went into social media with the intent to use it as a customer-service vehicle. “Getting that right was our first priority,” he said. Then the desire to monetize the efforts took hold and, admitted Doiron, “It took nine months to get that right.”
Watch other credit unions, which increasingly devote significant staff resources to social media channels, seek ways to measure and monitor their return on investment in these new channels.
Mobile remote-deposit capture triggers debate about its long-term staying power, but, for now, it has vaulted into a must-have status as increasing number of credit unions race to offer it to members.
Mainly, it is the bigger institutions that offer mobile capture, but research from Aite shows many credit unions hungering for this tool, which, in many respects, has become the flashy proof of what’s compelling about mobile banking.
“We are rolling out mobile capture later this month,” said Hope’s Bynum who indicated that his credit union believed its members would jump on it.
At CAP COM, a $972 million credit union in Albany, NY, Corrie Jayne Foust, manager of electronic services, said that member response to its recently introduced app has been strong, with 1,000 members downloading the app in the first two weeks, and collectively, they had deposited 700 items.
The stampede of institutions into MRDC looks to intensify in the near term, said the experts, and that wins the technology a place on the 2013 list.
Digital wallets will get real in 2013, predicted Mountain America's Rasmussen, who indicated his institution is pursuing the paperwork to be featured in Google Wallet. Member interest in digital wallets has been minimal, admitted Rasmussen, but as marketing builds around Visa’s V.me, the wireless carriers’ Isis pilots and Google Wallet, interest will vault up quickly in 2013.
A big plus of digital wallets is that financial institutions can get involved at low or no cost and that makes it a fast track for seeming cutting edge even for frugal credit unions.
What about the technologies that did not make the list? There are many much talked about technology trends that probably can be safely ignored in 2013. Credit unions that pride themselves on leading the pack will make their moves–they may already have–but the vast majority can safely ignore tablet apps. They are “likely to become mainstream in 2014 but not 2013,” said Aite’s research director Christine Barry. Person-to-person applications, big data and personal financial management tools will also not come to the fore next year, experts said.