By Bob Hackney
If your credit union is like most, you currently offer your members a mobile banking app that mirrors online banking functionality of balances, transaction history, transfer of funds between accounts and bill pay.
Members have come to expect the speed and convenience mobile banking provides. 2015 marked the first year that more consumers performed their banking services using their mobile device than in-branch. That is why it’s imperative that credit unions have an evolving and robust mobile strategy in place today.
For the foreseeable future, mobile payments will continue to dominate the headlines. This includes mobile wallets, cardless cash at the ATM, mobile account opening and especially the burgeoning product space of FI-branded wallets. Bitcoin, and more specifically, the use of blockchain technology in mainstream banking, will remain in exploratory mode as different use cases are vetted. CurrentC, the merchant-owned mobile payment system announced by MCX in 2012, is closing up shop. While the launch of Chase Pay is now delayed.
2015 saw a full year of Apple Pay as well as the launches of Samsung Pay and Android Pay. The industry is still in the early stages of adoption with the “Pays” and there has been a lot of coverage on current adoption rates versus expectations. Based on a pymnts.com tracking study, the number of iPhone users trying Apple Pay at least once has increased to 23%. However, in store usage of Apple Pay by iPhone owners has actually declined from a high of 5.9% for all transactions in March 2015 to 5.1% in October 2015. The shift to mobile payments is subtly happening, but changing usage behaviors takes time.
Cool, But...
While mobile payments have a cool factor, they don’t solve a problem. They are not faster, more reliable or more convenient than a card swipe. According to recent research, smartphone owners are not buying a new iPhone, for example, just because it includes Apple Pay. Merchants, meanwhile, have also been slow to deploy NFC enabled terminals at the point of sale to enable mobile payment transactions. This too causes cardholder confusion and malaise when it comes to mobile payments.
Even with the gradual shift to mobile payments, traditional cards will be around for years to come. But, they will evolve to mobile over time. Consider the facts: the majority of smartphones (the common denominator for mobile payment) are in the hands of millennials; there are now more millennials than any other generation; and the average age of credit union members is going up. When all of these factors are taken into consideration, credit unions must have a strategy that reflects these trends and positions you to retain and attract members in the future.
Finally, there are other benefits of having an evolving mobile strategy such as alerts and card controls to address fraud, the number one threat to the revenue generating card based ecosystem we have today. Alerts and card controls are currently available and credit unions need to offer them to be competitive with the big issuers and reduce fraud.
Bob Hackney is president and CEO of CSCU. For info: www.cscu.net.