Mobile has been an important strategic investment for credit unions for some time now, so it is no surprise that many credit unions have launched a host of sophisticated apps to drive member engagement. Today's mobile banking apps now feature a wealth of capabilities including funds transfer, remote deposit capture, personal financial management, debit card on/off functionalities and bill pay.

For the past few years, mobile RDC was generally considered one of the largest drivers in moving members to the mobile channel, but the popularity of mobile bill pay has begun to eclipse it in importance. In fact, the number of U.S. online households using mobile bill pay doubled from 8 million in 2012 to 16 million in 2013, and this level of adoption is only expected to continue to grow. AlixPartners reports that by 2018, 24% of all bill payments will be made on mobile devices.

As a result, it is now more important than ever that credit unions offer a mobile bill pay functionality to attract and retain the next generation of members, especially to ward off similar offerings from their larger, national competitors.

While moving the bill pay process to the more popular mobile channel will help credit unions drive overall bill pay engagement, credit unions must first overcome the perceived inconvenience of entering the payee information. While this process can be cumbersome through traditional online bill pay, it is often even more difficult on the mobile device as entering biller information on such a small screen can be time consuming and frustrating for members.

The most important characteristic of a credit union's mobile bill pay technology should be simplicity in ease of use, so to drive bill pay adoption in a meaningful way, credit unions must roll out more-innovative mobile bill pay solutions that simplify the bill pay process as much as possible.

So how can credit unions effectively replace the keyboard and complete data entry for their members? The smartphone camera is the key–implementing a mobile photo bill pay tool allows members to easily pay their bills anytime, anywhere. More importantly, it allows members to automatically add new payees with the simple snap of a photo. Mobile photo bill pay users can also leverage the system as a digital file cabinet to store copies of their bill payments.

Mobile photo bill pay is innovative enough to attract today's tech-savvy members, but simple enough for the average user to understand. The majority of members already know how to take a picture with their phone, which lowers users' resistance to learning a new bill pay system. This type of mobile bill pay functionality is not even offered at the majority of the nation's largest banks, so credit unions that offer this type of solution will have a strategic differentiator and a competitive advantage over much larger institutions.

Alternative mobile bill pay solutions like mobile photo bill pay are not only positioning credit unions as innovative solutions providers within their respective communities, but increasing bill pay adoption has proven to be a key driver of member retention. AlixResearch reports that 28 percent of Americans between the ages of 26 and 34 would be likely to change their financial institution to gain access to mobile photo bill pay. Additional research indicates that non-bill pay users are 13% more likely to leave their institution, whereas bill pay users are only 3% more likely to leave – reducing the member churn rate by about 75%.

In addition to driving member retention, mobile photo bill pay can help attract an entirely new segment of members to the credit union's bill pay services. Some institutions that have already rolled out mobile photo bill pay report that on average, half of their mobile photo bill pay users were not previously enrolled in their institution's bill pay and, as such, represent new bill pay customers leveraging the institution's mobile channel–further driving member acquisition and retention.

In order to thrive in a hypercompetitive environment, credit unions must offer innovative technology paired with superior levels of service to attract and retain today's consumers, who have begun to expect more and more functionality from their financial services providers. To do so, credit unions must leverage innovative technologies like mobile photo bill pay to protect and grow market share or run the risk of losing members to competitors or non-traditional providers who are stepping in to provide these services.

Joe Bellavance is vice president of credit union services for Allied Payment Network Inc. in Fort Wayne, Ind.

CONTACT: (260) 247-9102 or [email protected].