Today's consumers demand cutting-edge technology for everything from their cars, smartphones, grocery stores (Amazon Go) and yes, even their banks. Major banks are investing heavily in new technology to provide the latest and greatest to their customers, often by partnering with fintechs to provide innovative technology. That could explain why the fintech market is thriving: PricewaterhouseCoopers estimates that cumulative investment in fintech globally could well exceed $150 billion in the next three to five years. We'll see most of the innovation on mobile, since researchers predict that by 2020, smartphone subscriptions are expected to top six billion globally and 81% of adults in the U.S. will be using mobile banking.
Some of the most innovative and largest banks have already taken note, integrating new mobile apps and features to adapt to consumers' mobile-first lives. For example, Citibank's banking app has smartwatch compatibility. And Wells Fargo, USAA and more than a dozen other large banks are using biometrics technology, from voice recognition to eye imaging and fingerprint identification, to authenticate and secure customers using their mobile apps for banking transactions.
With major financial institutions partnering with fintechs to offer their customers the latest technology, do credit unions stand a chance at keeping up with the pace of innovation?
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For the following Q&A, I sat down with Eric Givens, senior director of research and development at the $1.4 billion, Phoenix-based Arizona Federal Credit Union to learn how his credit union is exploring innovative technology and keeping up with big banks.
Q: How can credit unions keep up with big banks? What are some of the advantages that credit unions have over big banks, and what is Arizona Federal doing to keep pace with them?
A: Credit unions' smaller size may actually provide them with more opportunities to innovate quickly and respond to members' needs. At Arizona Federal, we've been able to focus our efforts heavily on research and development in order to offer the most cutting-edge technology available today to our members. Our in-house research and development department spawned from our digital banking area, and is focused exclusively on finding the best and newest technology for our membership.
Q: Tell me more about Arizona Federal R&D department. What sort of technology has your department rolled out?
A: One result of our R&D department is the introduction of the latest biometric technology to make our members' lives easier and their banking transactions more secure. We partnered with our mobile banking provider, Digital Insight, an NCR company to help develop an easier login experience for our members. Members can choose to use Apple's Touch ID or their fingerprint-enabled Android for fingerprint verification, and of course, EyeVerify's Eyeprint ID – which takes a selfie of your eye using your phone's camera to verify your identity – all within our mobile app.
Q: Beyond biometrics, what other technology offerings does Arizona Federal offer to its members?
A: Our technology offerings don't stop at biometrics. While most major banks and credit unions offer some mobile capabilities, we've prioritized offering a full banking experience on mobile. We looked at our member data and found that our branch transactions have declined 53% since 2010, while our mobile logins have increased 212% since 2012. Offering a comprehensive mobile experience is pivotal to meeting the mobile lifestyle needs of our members.
Our members can apply for a loan, become a member, and take out a credit card all from their mobile devices. In comparison, most financial institutions only allow you to start these processes on mobile, but require you go to a branch in person to complete them. We've simplified our processes as much as possible to offer our members the most convenient and secure experiences on mobile. We've also made our app compatible with Apple Watch and Android Wear, enabling our members to get updates on all of their devices seamlessly. We also have a card control app named CardPower that instantly alerts our members if abnormal transactions occur (such as a transaction in a new geographic region) in order to provide the latest in fraud protection.
Q: It seems like smaller banks and credit unions have a big opportunity to keep pace with big banks and innovate. With that in mind, what's up next for Arizona Federal?
A: Exactly – our size keeps us nimble and enables the R&D team to quickly adopt new technology. We are always looking around the corner for the next big tech innovation to enhance our members' experience. As far as what's up next, we've recently launched a partnership with CUneXus that integrates pre-approved loan offers into our mobile app, allowing for a member-friendly, streamlined application process. We're about to introduce a new money management feature on mobile to help members manage their financial goals. We are also researching chatbots, blockchain use cases and even integration with voice-controlled AI assistants like Alexa. We continually research the technology being tested and used in the marketplace to find value-added solutions that keep our members happy.
Paige Bailey is VP of Financial Solutions EyeVerify. She can be reached at [email protected].
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