DENVER–An initiative launched by the Federal Reserve isn’t just reflective of a trend affecting credit unions in the United States, it’s part of a much broader macro-trend with implications for CUs around the world.
As noted by Sarah Canepa Bang at the joint WOCCU World CU Conference/CUNA America’s Credit Union Conference here, that initiative, Fed Faster Payments, seeks to push the industry to safer, ubiquitous and faster payments capabilities in the U.S.
Sarah Canepa Bang speaking at WOCCU/CUNA meeting in Denver.
“We’re seeing this age of impatience,” said Canepa Bang, chief strategy officer with CO-OP Financial Services in Rancho Cucamonga, Calif. “ But I think CUs have faced this with members for a long time. I’ve talked to CU CEOs who are thinking about new products and services and they say this is what members say: ‘We don’t want it, we don’t want it, we don’t want it, why don’t you have it?’ You have to stay a step ahead of members.”
Canepa Bang said that while the perception may be that credit unions lag on technology, the reverse is really the case. She pointed out that with shared branching, for instance, credit unions have had real-time good funds money movement in place for 30 years.
“That’s where the rest of the world is trying to get to,” she told the meeting.
CO-OP has sought to keep credit unions on pace with the technology curve. In Q1 of this year it introduced CO-OP Sprig, which provides for real-time in- and out-of-network payments. It is also offering Real Pay by CO-OP, a new person-to-person payments network that will allow members to move funds to banks. That solution incorporates the FIS PayNet platform and is available in three different formats: as an API, as a feature of the updated Sprig by CO-OP app, and as a feature of the new CO-OP Mobile.
What The Numbers Show
Canepa Bang said the numbers make clear how the market is moving to mobile, including mobile payments. From 43% of users in 2014 who had used mobile for payments, that figure is 68% today, according to CUNA E-Scan. Sixty-percent of consumers make digital payments monthly, 30% by mobile phone, 22% by tablet. Mobile payments will reach $214 billion in 2014, up from $16 billion in 2010.
“This isn’t just for the super-sophisticated; this is happening at all levels. Even at garage sales you see on homeowner’s phones a Square attached,” said Canepa Bang.
Looking forward, surveys show 51% of smartphone owners would confirm a purchase by text alert; 41% would do a mobile money transfer; 43% would replace their cards with a mobile wallet if they could, and 32% would swipe a card on a mobile card reader.
Credit unions have always had to be innovative, said Canepa Bang, due to the lack of resources compared to other financials. With almost 60% of credit unions now offering mobile banking, she noted that “everyone is now talking about branch transformation, and the key to branch transformation is remote deposit capture. RDC is very much changing the branch world and transforming it. Does it mean members won’t be coming to branches? Absolutely not. But it is reducing foot traffic, and for the member it is wonderful if you can get them to use it. Remember everyone thought that ATMs were going to be the branch killer. Then when everyone went online it was thought that would be the branch killer. But as new channels have developed we realized that members just added it to their list of things they do to get access to their money. Mobile is going to get bigger; I have a feeling online is going to level off.”
What CUs Must Ask Themselves
Canepa Bang said every credit union needs to ask itself if it is made for the modern consumer. Surveys of those modern consumers say their number-one driver in selecting a financial services provider is convenience (44% of those surveyed rate it first). That’s followed by speed (22%), security (19%) and customer service (15%).
“We want speed. People aren’t comparing us to other financial institutions; they are comparing us to McDonalds,” Canepa Bang said. “And I think with all this news around breaches security will also become more of a big deal.”