By Ryon Packer
Consumers and members are approaching financial services with an Amazon.com mindset, and I don’t think that anyone doubts the projection that mobile and digital methods are the primary way institutions will interact with members in the future.
We are already well past saturation of mobile devices (we hit 80% two yearsago according to ComScore data). All we are waiting on now is for usage of mobile banking to hit the same saturation point, and we’re getting close.
Raddon data suggest that we have cleared 40% adoption among all consumers, and cleared 70% usage among Millennials. While the idea that this will erase the need for branches is, for now, farfetched (71% still feel it is important to have a branch near home or work), all signs indicate that every financial institution should have a thoughtful mobile strategy in place.
There are however, a few challenges for many of smaller credit unions in this area: mobile banking is newer and less familiar, it can be expensive, and the most feature-rich solutions may not be what yourmembers need or want and be far outside of the budget to boot. So, how far should a smaller credit union wade in?
Topics for Discussion
I’d propose the following areas as a part of internal, strategic discussion on this topic:
* Take a hard look at branch use. Small institutions run lean, and operations are branch based. The in-person relationships that develop inside those branch walls are the beating heart of any small credit union. But members want access beyond the branch, and branch operations are costly. There is a good chance that if you take a look at your operating costs, there can be some realized cost savings associated with providing a solid digital banking option – particularly on mobile – to complement your branch presence.
* The waters are a bit uncharted – and that’s an opportunity. According to Raddon, only 9% of members from credit unions with $25-50M in assets are using mobile banking. The numbers aren’t much better for even mid-sized credit unions. This means that the mobile waters for these institutions are uncharted, but the opportunity for differentiation is significant.
Small institutions who want to stand out in their market can do so with thoughtful digital and mobile offerings that help them compete with their members’ alternatives like larger CUs, banks or other financial providers (note that I say compete – not dominate – it is an important nuance). So, ask yourselves: “Is this a concept that has promise for our credit union?” and, “how can we create an offering that hits the right mark of affordability and capability?” (Hint: find out what your members actually want!)
Take a look at your primary financial institution (PFI) statistics. Mobile banking allows credit unions of any size to be more “sticky.” What I mean by that is that the added access and convenience makes a credit union that has a solid digital/mobile offering much more attractive as a PFI. It is increasingly difficult to maintain and grow PFI relationships without the right overall offerings and access.
For the small segment, PFI relationships are extraordinarily important. So, it’s important to think deeply about mobile/digital in the context of building and maintaining them.
By offering competitive digital and mobile solutions, you may set your credit union up for another generation of service and success. The first part of the journey, candidly, is to ask the right questions of your members, your team and your technology partners to determine what it is you need at your credit union to be succeed.
Ryon Packer is SVP, Strategy and Marketing with Fiserv.