Nowhere in credit unions is change coming more fiercely, furiously and fast than in mobile banking, something that just five years ago seemed futuristic, the stuff of sci fi but which today has emerged as a must have and perhaps also as a way for small-footprint credit unions to compete with the biggest banks.
A regional credit union cannot have hundreds of branches – but with smartphone-carrying members there is a branch in every pocket, and that is the game-changing magic of the technology.
Mobile banking continues to evolve. Here, experts pinpoint five ways mobile banking in 2014 is likely to be very different from what you had known.
Read more: The biggest channel ...
5. The biggest channel
Brown flatly predicted: “In the next 12 months, mobile will overtake online in terms of number of users. It already has more transactions.”
He added that this is upping the ante for credit unions in terms of the quality, and functionality, of their mobile banking apps. “Consumers will have very little patience with apps that don’t perform,” he said.
Early adopters cut apps slack, the newcomers to the mobile channel are there for the performance, period.
Other experts may see mobile domination not coming until 2015 but know this: just about every expert sees this happening much sooner than had been thought a few years ago, as well-priced smartphones become the norm and the cellular carriers put high-speed 4G in ever more neighborhoods. The infrastructure is there and so the use of banking services will only multiply.
A related trend: more members are asking for mobile only access, that is, they do not intend also to use online banking. That creates a complication in that many mobile banking packages are parasitic on online (for instance, new payees may have to be added via online) but, said experts, tweaking mobile tools to decouple them from online will not be a challenge for most institutions and that just may be tested in 2014.
Read more: The camera has it ...
4. Say Cheese: The Camera Has It
The smartphone camera has been a key to mobile banking's rapid adoption, said Robb Gaynor, chief technology officer at Malauzai, an Austin, Texas, developer of mobile apps which has rolled out mobile remote deposit capture – perhaps the quintessential mobile banking activity – as well as Picture Pay, where consumers can pay a bill by snapping a picture of it.
Noted FIS’ Brown: “MRDC is what really differentiates mobile banking from online.”
Theoretically, an online banking user could scan a check and deposit it – and at least some did – but it never caught on outside of business users. Suddenly, MRDC is emerging as the defining popular mobile banking activity, said Gaynor, and a key has been the progressively better and sharper cameras on smartphones.
The first iPhone, in 2007, shipped with a two-megapixel camera. The current iPhone 5S ships with an eight-megapixel camera and that means sharper, clearer images and more successful deposits, just because the built-in camera has gotten so much better.
Now that camera is getting enlisted to help consumers pay their bills with a mobile phone and, said Gaynor, the financial institutions that are early adopters of Picture Pay are seeing usage that eclipses initial projections. Consumers apparently like the convenience of snap a picture, pay, done.
Experts envision yet more use of cameras in banking because this may be the fastest and surest way to input data on a small form factor device. Typing on glass on a tiny keyboard is not easy and never is fast. Snapping a photo – of a driver's license, for instance, or a pay stub – is as easy as a click and if the experts are right, we will be doing more of that in 2014 as more apps build in roles for the camera in processes such as account onboarding, predicted Gaynor.
Read more: What's in your digital wallet?
3. What's In Your Digital Wallet?
This just may be the year when your credit union needs to decide its digital wallet strategy. That is the prediction from Paul Fiore, founder of CU Wallet, who said, “2014 will be the year of the digital wallet for financial institutions. For consumers, it will be 2015.”
Assembling a viable digital wallet payments tool has proven much more complicated than many once thought. Consumers, financial institutions, merchants, smartphone makers and still others have to be brought on board and, so far, they have not been rushing to embrace this new payments tool where the phone replaces the plastic card.
But experts insist that adoption of digital wallets is simply a matter of time.
“We will see much more aggressive piloting of digital wallets in 2014,” said FIS’ Brown.
Integral to wallet adoption will be inclusion of rewards and discounts, said Fiore. The phone becomes the delivery tool and, in that way, a digital wallet will be substantially smarter and more personalized than a plastic card in a leather wallet. As that happens, consumers will naturally begin using mobile wallets and that is why credit unions need to begin to take steps to be ready, said Fiore, who said 33 credit unions had already signed up for CU Wallet.
Read more: Biometrics Matter
2. Biometrics Matter
Will 2014 finally be the year when biometrics as a tool for positively identifying a member catches on? More experts are saying that is exactly what will happen, and they point to Apple's Touch ID fingerprint reader as a tipping point. Because it is Apple, “People think it is cool, not an annoyance,” said Jay McLaughlin, chief security officer at Q2, the Austin, Texas, financial technology firm.
McLaughlin added, “Biometrics will be the future for financial institutions. Something I am will become part of the login.” That will be another factor along with something I have and something I know, said McLaughlin.
Various biometric modalities are competing for the pole position – there are fingerprints, eye scans, also voice prints.
Lately – and despite Apple's deployment of fingerprints – some are looking to voice, mainly because it's a natural complement of smartphones. “Voice is a natural part of using the phone,” said John Petersen, a founder of ValidSoft, a voice biometrics company. He added that ValidSoft tools are in tests with several financial institutions right now.
Makers of other biometrics of course plump for their tools but know this: the more doubts that are raised about the security of the username-password login, the more the quest for alternatives will intensify and, right now, biometrics seem primed for broader adoption in the coming year.
Read more: Non-banks rising
1. Non-Banks Rising
Amid the good news driven by mobile banking, there is a worry on the horizon: The rise of the digital only and non-bank. From GoBank to Bluebird new banking competitors are emerging and, said FIS’ Brown, their future looks rosy. “Digital only banks will grow faster than traditional financial institutions. They clearly have a value proposition that resonates with a profitable customer base, with multiple customer relationships.”
Note: Nobody is outright predicting the disappearance of the traditional branch-based institution but futurists, increasingly, envision a world where a growing number of digitally savvy consumers get the financial services they need from institutions with a small, or no, physical presence.
And that means the stage is set for yet more reinvention, yet more innovation because the mobile banking revolution is only in its first phases. There is much more ahead and it will likely come faster than anyone has thought.