In the span of just 12 months, a revolution in financialtransactions has occurred. Mobile banking has shifted from nice tohave to must have at credit unions across the country as a stampedeof institutions have embraced the idea that members demand theconvenience of banking from the palm of their hands.

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“About 3,000 of some 14,000 banks and credit unions in thecountry now offer mobile banking,” said Drew Sievers, CEO of mobilebanking apps developer mFoundry. “We sell mobile banking to a newfinancial institution every 26 hours.”

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At Fiserv, Kelly Rodriguez, director of strategy, sees similarpenetration, “About 30% of credit unions now offer some form ofmobile banking.”

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But this is a you-ain’t-seen-nothing-yet moment for mobilebanking, according to Sievers.

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“In 2012, just about every credit union will accept that itneeds a mobile banking offering to stay competitive,” he said.

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More numbers show that members are using the mobile bankingtools that have flooded the market.

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“Nearly one in four Americans currently use mobilebanking, and another 17% plan to try it in 2012,” said Tobin Lee, aspokesperson for Intuit Financial Services, another developer ofmobile banking tools for credit unions.

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Easing the fast adoption of mobile banking is that by this stagein the offering’s life, implementation has, in most cases, becometrouble-free. At Apple Federal Credit Union in northern Virginia,Jennifer Peart, a vice president, said of the institution’s recentrollout of smartphone apps for Android and iPhone, “We had a greattime with the rollouts.” Importantly, she added, member adoptionhas been vigorous, “About 15% of our members now use mobilebanking.” That compares to about 40% who are active online bankingusers. But online banking has had over a decade to accumulateusers, whereas Apple unveiled its first version of mobile banking,TXT-based messages, in 2009.

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Like most credit unions, Apple turned to a third-party vendor,Intuit Financial Services, to implement its mobile banking tools.That is the norm. The largest institutions may create in-housetools, but the vast majority decide to buy a proven solution thatthey customize with their own front end.

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“You really can’t home-brew mobile banking,” said Sievers, whoindicated there is a range of challenges around real-time dataupdating, interfacing with cores and security that, for all but ahandful of giants, make it improbable that DIY approaches willprove cost effective.

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However an institution gets to mobile banking, the reality isthat users appear to be clamoring for these tools, and nowhere isthis more apparent than in a key demographic. Young people, 18 to32 year olds, are three times more likely to adopt mobilebanking than older users, according to data from Intuit FinancialServices. That looms large as many credit unions seek to recruityounger members. However, the experts stress that without mobilebanking a credit union won’t be able to do so.

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But it’s not just younger users who want mobile banking.

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“Mobile banking is driving great engagement for credit unions,”added John Flora, an Intuit Financial Services spokesperson. Anemerging reality is that, in addition to barebones account info andtransactions, a compelling plus of mobile banking is that itenables more valuable communication between a financial institutionand its members. With warnings about bills about to become overdueand perilously low account balances, mobile banking has become atool for the credit union to put important information in front ofmembers when they need to know it– before a bill is overdue asopposed to after. This, suggested Flora, helps spawn deeper ties,and he added that mobile banking tools also bring more use. “We see45% more logins by mobile banking users than onlineusers.”

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At the same time, the mobile banking offering is graduallybecoming more powerful, said Rodriguez. While some credit unionsoffer only informational tools, balance checking, alerts andtransfers to other accounts at the same institution, 2011 saw manymore institutions adding remote-deposit capture and bill payment,she said. The consensus from experts is that in 2012 bothremote-deposit capture and mobile bill pay will emerge as musthaves for most credit unions.

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Optimistic as all that is, there remains an area of gnawingworry. Will cyber criminals find riches in stealing mobile bankingdata? “Security is the number one concern for many credit unionsand members alike,” said Rodriguez.

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A sliver of cheery news is that, so far, there have been nosignificant outbreaks of mobile banking malware, said BrendonWilson, senior product marketing manager with Symantec, whichcreates tools to combat viruses, trojans and malware. But that dayprobably is coming and soon, said Wilson, whose advice to creditunions is that they take steps to toughen their back ends toheighten sensitivities to possible fraud.

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Right now, however, Wilson indicated that a frontline defense ismore training for support staff. For instance, customer servicereps need to be taught to be wary when a member calls in and sayshe or she has “a new cell phone number; I lost my old phone.” Thisis a big issue as more institutions bring in cell phones asmultifactor authentication tools. “There needs to be moretraining,” said Wilson.

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A last note about the necessity of mobile banking. No mainstreamexpert expects Near Field Communications’ tap and pay mobilepayments to take off broadly in the U.S. in 2012, in 2011 NFCmainly won press coverage because search giant Google integrated itinto its Nexus smartphone. Although many do see a slow pick-upstarting in 2012 and then accelerating in 2013. At that point, NFCmay emerge as a must have. Credit unions with solid, heavily usedmobile banking tools will be the ones that see the fastest pickupof NFC, said Serge van Dam, a vice president at Fiserv. “My adviceto credit unions is, get really good at mobile banking. Get membersready for NFC when it comes available.” 

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