Mobile banking has quickly taken on a key role in the growth strategies of leading credit unions.
The rollout of basic mobile services such as balance inquiries, balance transfers, bill pay, and ATM and branch location capabilities, has been well-received by members. As a result of this initial success, many institutions are evaluating the benefits of expanding mobile banking to include a full complement of transactional and interactive services.
In addition to meeting member demand, credit unions have the potential to reduce member service costs and generate revenue by adding next-generation mobile banking capabilities. These capabilities include: person-to-person payments, remote deposit capture of checks, personalized offers from the credit unions and merchants based on member spending behavior, actionable alerts via text messages or push notifications, and contactless payments at the point of sale.
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In addition to contributing to member retention and growth of the member base, moving beyond foundational services to offer the next generation of transactional and interactive mobile banking services creates opportunities for credit unions to maximize mobile return on investment in two primary ways:
Greater Mobile Adoption – The addition of each new feature, coupled with the effective promotion of the new service, can lead to incremental adoption of mobile banking. Once a member has signed up for mobile banking, robust capabilities enable them to shift their interactions from high-cost channels such as the call center and branch, to the lower cost, higher convenience mobile channel. According to Fiserv data, a good rule of thumb is to assume that the potential exists for 20% of all of a mobile banking adopter's transactions to migrate to the mobile channel over the course of a year.
Credit unions also have the opportunity to increase adoption by supporting the use of tablets to conduct banking activities. Tablet support could attract additional mobile banking users and transactions from among those who prefer this format. The more interactions a credit union can shift away from higher cost channels to the mobile channel, the greater the potential cost effectiveness and ROI.
New Revenue Sources – Credit unions have the potential to create new convenience fee revenue by offering value-added mobile services that provide a quicker, easier way to conduct transactions, including: emergency bill payments, P2P payments, remote deposit capture and merchant-funded offers. Consumers have shown a willingness to pay for services that they perceive as useful.
Mobile banking use also encourages value-generating activities such as debit card usage, by enabling members to stay in closer touch with their finances.
The potential to achieve additional, measurable return on investment from the mobile channel is real. Credit unions that are considering implementing next-generation mobile offerings can determine the right investments to maximize their ROI by taking these steps:
Assess and Sell the Business Case –To determine and prioritize future investment in mobile banking, credit unions should consider the potential ROI of specific mobile channel products and features. For example, credit unions must know the average transaction costs of each banking channel and determine how the expense will be offset by diversion to the mobile channel. This can be done using industry estimates, or by using ROI modeling tools that leverage actual credit union data, which may be available through the credit union's mobile banking vendor.
Conduct Market Analysis and Research – Credit unions should conduct primary and secondary research, particularly into new mobile banking features and functions, and evaluate how the features are perceived by distinct consumer segments. The best market analysis can be conducted using the credit union's own members – whether via focus groups or surveys to the existing member base – to identify the mobile banking offerings members are most likely to adopt, and those for which they would be willing to pay a fee.
Implement Focused Adoption Management Programs – In a recent white paper, Fiserv identified five factors that will drive consumer adoption of mobile banking: usefulness, accessibility, security, familiarity and ease of use. Ensuring that mobile banking services pass consumer adoption criteria will accelerate adoption and help maximize ROI. Reviewing industry thought leadership can help credit unions design an effective product and marketing roadmap and compelling campaigns to drive adoption outcomes.
Practice Effective Channel Management – Tools that enable credit unions to capture data about the mobile banking behavior of members are invaluable. Using a mobile channel dashboard will enable credit unions to monitor important performance measures, such as percent of active users, percent of mobile banking users in relation to online banking users and mobile transaction volumes.
The more members a credit union can shift to the mobile channel and the broader the menu of ways in which those members can transact, the higher the potential ROI. By offering a full complement of mobile services, credit unions will be positioned to derive increased value and return from member relationships. The potential increase in revenue in tandem with the reduction in costs should more than prove the business case to fund support for next generation mobile banking services.
Shirra Frost is director of mobile marketing at Fiserv.
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