Mike Kelly Thirty-five percent of the credit unions in the Apple Pay adoption queue are PSCU members.

Ask Mike Kelly about the future for credit unions and the president/CEO of payments giant PSCU, the nation's largest CUSO with some 800 member-owner cooperatives, is plainly bullish.

“Credit unions are as well-positioned as anyone to win. We have a great, ethical business model. Nobody has more social currency than credit unions,” Kelly said in an interview with CU Times on trends for 2015.

That community-focused business model also positions credit unions to win with the Millennial generation because the industry hits on themes that will resonate with Gen Yers, he said.

Although financial service sector has immersed itself in a world of swirling change, in some respects, the essence of the business has not changed.

“It's about money,” Kelly said. “Money is what's durable.”

Still, he sees sweeping transformations ahead, among them, Apple Pay, CurrentC, and what he called “the Uberfication of payments.” Despite the changes and challenges for credit unions, Kelly said there is much to be optimistic about and is insistent that the industry is primed to prosper.

For one, mobile banking has redrawn the battle lines in ways that favor credit unions, Kelly said. Historically, branch networks weighed heavily in decisions about which institution provided the best service and, if branches were the measure, the winners for many consumers would inevitably be the mega banks with vast branch networks such as those from Wells Fargo, Chase, Bank of America, and Citi.

But mobile banking has put a branch in every consumer's hands, Kelly offered. That, he said, has strengthened the competitive position of credit unions. Yet, by no means is he advocating shutting branches.

“It's not about either/or,” Kelly said. “It's about yes, and. We have to go to where the consumer is.”

Traditionally, financial institutions herded consumers into branches at set locations and with set, often limited hours, Kelly said, adding that's not what consumers expect now.

He threw out a made up word that he felt captured the essence of what this shift is about.

“I call it 'digical,'” Kelly said. “'Digital' plus 'physical.'”

The focus of the branch has to shift from transaction processing such as doing a routine check deposit, for instance, to higher value activities as more consumers handle their own transactions, often on a mobile device.

“You don't need to go to the branch anymore. We need to stop that narrative,” Kelly said. “Branches are fixed assets, they are static. It is open certain hours. Mobile is dynamic, it's available 24/7. We have to re-envision what goes on in a branch.”

Kelly took it one step further.

“We are all being Amazoned. Consumer expectation is changing. They are driving it. We are moving towards get it now, get it cheap.”

Credit unions need to adapt to that shift in consumer behavior, Kelly suggested. However, one thing to stop thinking about is “omnichannel” and related terminology, he noted.

“You don't want the member thinking about the channels. You want them thinking about your brand, not the channels,” Kelly explained. “It's about frequency. Mobile allows you to up frequency. The game remains the same: Your card top of wallet.”

Read more: The Uberfication of payments …

In that vein, Kelly said we are deep into what he called the “Uberfication of payments,” meaning, the kind of dramatically reduced payments friction enjoyed by users of the popular ride- sharing service. In Uber, a user sets up a payment method once, and as rides are booked, the payments, in the minds of some users, seem to happen effortlessly.

“It's about the end of payment friction,” Kelly said.

He spoke glowingly of Apple Pay. Thirty-five percent of the credit unions in the adoption queue are PSCU members, according to Kelly.

“It is great news that Apple chose to collaborate with the traditional payments providers,” he said.

However, Kelly had one gripe about Apple Pay.

“It's not ubiquitous,” meaning, it's not yet widely accepted at retail and until more locations embrace the new channel, Apple Pay cannot be viewed as a dominant payments player.

Meanwhile, it is premature to write off Google Wallet.

“It is hard to believe that Google won't respond in a big way [to Apple Pay],” Kelly said.

Exactly what Google will do to revive its Wallet is unknown but he said it is difficult to envision the Android universe of mobile phones not having a widely-deployed wallet.

As for CU Wallet, the start-up CUSO owned by several dozen credit unions and aiming for the same mobile payments space as Apple Pay and Google Wallet, Kelly said: “CU Wallet has a place in the industry. It's still early days. They have as good a chance as anyone. They have gotten [credit unions] to invest, that's never easy. I am a fan.”

One of the newest payments tools that Kelly did not applaud is CurrentC, the app launched by Merchant Customer Exchange merchants such was Wal-Mart and CVS.

“The credit union demographic is the Wal-Mart demographic. Wal-Mart is your enemy,” Kelly said.

Advocates have said CurrentC plans to reduce or even eliminate interchange while giving merchants rich access to consumer data, perhaps to the exclusion of access to financial institutions.

Either way, “there are opportunities for credit unions that are better than CurrentC,” Kelly said.

Sorting through the opportunities and the threats, the St. Petersburg, Fla.-based PSCU advised members in 2014 to talk SMAC or “social, mobile, analytics and cards,” he added. For 2015, the message has not changed much.

“Now, we say they need to walk SMAC,” Kelly said. That is, dig in, and truly pursue social, mobile, analytics and cards.

“It's about implementation,” he advised. “You have to be invested in mobile and if you are, you will be positioned to win.”

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PSCU's Kelly Sees Promise in &lsquo;Uberfication&rsquo; of Payments

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PSCU's Kelly Sees Promise in ‘Uberfication’ of Payments