It may be hard for some to fathom that in today's world there are people who still use a dial-up service to access the web, drive for 20 minutes to get cash from the nearest ATM or don't have any financial institution branches in their communities.

That's the daily reality for people who live in underserved rural or semi-rural areas, and consumers who are unbanked or underbanked in many communities across the nation also face financial challenges.

What all of these consumers have in common, however, is that most of them own a mobile phone, and credit unions are leveraging mobile banking to not only meet their financial needs, but to improve their financial lives.

“It is pretty interesting, the mobile app is one of our fastest growing services,” Ed Sivak, executive vice president of policy and communications for the $181 million Hope Federal Credit Union in Jackson, Miss., said. “Each month you see growth in both in the number of people who sign up and register and in the number of people who are actively using it.”

He added, “Far and away, the No. 1 thing that people use mobile banking for is for checking their balance, which is if you think about it, an important feature when it comes to making sound financial decisions. We know that members are looking at their balance before making transactions. And the second most frequently used mobile app feature is internal transfer. These are good things because members are actually using the mobile app to make good financial decisions. We see this as a service to empower our members to better manage their finances.”

More than half of Hope's 30,000 members live in households that earn less than $35,000 a year.

About 30% of Hope's members have used high-cost alternative financial services such as money orders, check cashing, remittances, payday loans, refund anticipations loans, rent-to-own services, pawn shop loans or auto title loans. However, 72% of those members also say they used those alternative financial services less after they joined Hope, according to Sivak.

Mobile banking appears to be a growing channel with which credit unions can attract and retain underserved consumers.

According to the FDIC's National Survey of Unbanked and Underbanked Households, about 20% of American households were underbanked in 2013, meaning they had a bank account but also used alternative financial services.

More than 7% of U.S. households are unbanked, meaning they have no banking relationship.

The FDIC report also noted 82.7% of underbanked households had access to a mobile phone, and nearly 65% of those underbanked households said they had access to a smartphone, compared to 59% of fully banked consumers. (Click on chart to enlargen image.)

What's more, nearly 30% of underbanked consumers used mobile banking while nearly 22% of the fully banked households accessed mobile banking. In contrast, nearly 55% of fully banked mobile banking consumers were more likely to use online banking compared to 38% of the underbanked who used online banking.

Amy Goratowski, director of organizational development for the $110 million Prime Financial Credit Union in Cudahy, Wis., found that for about 72% of the credit union's 18,000 members who live in low-income designated areas, many don't have a desktop computer in their homes.

“Our community does have access to a mobile device,” she said. “Therefore, offering mobile banking to our membership became a high priority.”

In addition to offering the basic mobile banking features of checking balances, making transfers and remote check deposit, Prime Financial's app also allows members to apply for loans. In fact, more than 30% of electronic loan applications are completed via a mobile device, Goratowski said.

“New features will be introduced in 2016 that allow even more services to be performed via Prime mobile,” Goratowski said. “Bill pay and credit card integration will allow members to pay bills, block a credit card transaction and provide travel alerts.”

Hope also plans to expand its mobile app service this year to include a personal financial management tool that can help members with budgeting, expense tracking and other money management features.

“One of the lessons we've learned over the years is that the mobile app is a complement to our outreach strategies and enhances our member experience,” Sivak explained. “The way we reach people is by meeting them where they are in churches, community action programs and non-profit organizations. Our team members go out, meet people, and sign them up to become members. Once our members are comfortable with us, they'll sign up and use the mobile app.”

Nevertheless, the Federal Trade Commission reported mobile banking offerings are not always implemented in ways that facilitate economic inclusion for the unbanked or underbanked.

For example, mobile banking is often designed to work together with online banking. To access mobile banking, users often must have an online enabled bank account and use online banking.

According to the federal agency, sometimes certain mobile banking features, such as mobile banking alerts, need to be set up or changed via an online banking platform. Although underbanked and fully banked households have regular access to the Internet at similar rates, the use of online banking as the main banking method is considerably less prevalent among the underbanked.

This suggests that mobile banking's interdependence with online banking could constrain underbanked households' ability to take advantage of the full array of mobile banking functionalities.

Interestingly, the FTC's research also found the majority of fully banked and underbanked households that use mobile banking as their primary channel also use a bank branch.

For credit union members who live in rural or semi-rural areas, however, the nearest branch or ATM may be a 20-minute drive away or longer.

About three years ago, the $107 million GEMC Federal Credit Union in Tucker, Ga., began offering mobile banking to its 13,000 members throughout the Peach State. About half of its members work for 42 electric coops in Georgia and Tennessee that deliver electrical power to rural residents.

“I can tell you that we've had a very rapid adoption of mobile technology, especially in this rural market,” Mark Nofi, vice president of marketing for GEMC, said. “We look at those rural markets as being areas where people are underserved. In many of these rural markets that we serve it could be many, many miles for our members to get to a surcharge-free ATM or any other branches because we do not have brick and mortar branches. We only have three and they're all concentrated in certain areas.”

Although rural members also tap online banking, the Internet service may be spotty because, believe it or not, some rural areas only have dial-up service to access the Internet. Other members access the web via satellite, but that too is not always reliable.

Though checking balances and remote deposit are a couple of the most commonly used features on GEMC's mobile app, another popular feature used by members is the surcharge-free ATM finder. The credit union is adding more surcharge-free ATMs to its network to make accessing cash more convenient for their members.

Nofi also found the mobile technology helps the credit union attract new members, including millennials.

“We do presentations about our products and services at electric coops and we are often asked, 'Your corporate office is 200 miles from where I live, why should I do business with you?'” Nofi explained. “That's when we focus on making them aware of our mobile banking services and that we're only a phone call away when they need us.”

GEMC is also finding that many millennials are underbanked because they have mismanaged their finances.

“Younger people who are coming into the workforce have screwed up their credit primarily because they broke away from previous mobile phone contracts,” he said. “We're also seeing unpaid medical bills and some college debt. After we open an account, we also work with them to elevate their credit scores by setting realistic expectations on what they need to do to make their finances better.”

The new members appreciate that service, Nofi said, and as young members, they certainly appreciate and expect the mobile banking service as well.

While the credit union plans to enhance its mobile technology services, Nofi noted one challenge is a lot of compliance issues slow down the development and adoption of mobile banking app features.