A Moving Forecast
AUSTIN, Texas-Mobile banking in 2011 is much like the state of the Internet in 1995: There are wide ranging and plentiful predictions about this "wave of the future" and its implications on business, but what it will look like in five or 10 years is much less certain.
Mobile banking also presents broader issues beyond just transactional capabilities and related IT demands. For credit unions, mobile is both a threat (deeper-pocketed and even non-traditional rivals seize substantial share early and never relinquish it) and an opportunity (it lends itself to the creation of communities and unbiased information for which credit unions are a trusted brand).
What is certain is that much like 1995, not offering mobile banking isn't costing a credit union any members. For now. "Credit unions are not losing membership because they don't have mobile banking technology - but what's happening over time is that they will" lose members if that technology isn't instituted," observed Matt Flake, president at Q2ebanking "If you look at the growing number of iPhones and iPads sold, inevitably, that's the technology that people will start to access their account information from."
As always with technology, the uncertain piece in mobile banking is how many consumers will eventually embrace it and in what timeframe. Estimates of the number of people in the U.S. using mobile applications to do their banking range from 35 million (Aite Group forecast) to 41 million (TowerGroup) to as many as 100 million (Javelin Strategy). Juniper Research has forecast that worldwide more than 800 million people will access banking products via a mobile phone by the end of 2011.
The Investment Dilemma
For credit unions weighing where to invest right technology budgets, mobile banking has emerged as a challenge much more quickly than many had anticipated. Sara Brooks, SVP-marketing and offerings development with Fiserv, Brookfield, Wis., noted recently that even as credit unions are investing in the online channel, many consumers are skipping it and going straight to the mobile application. That's especially true of younger members.
As mobile banking shifts from a "nice to have" to a "must have," credit unions must be sure to have "a robust set of mobile solutions that can satisfy the diverse needs of your member base," said Calvin Grimes, product manager for mobile solutions at Fiserv. Grimes stressed that mobile means more than just checking off a box and offering something simple to consumers, but making sure that "it's something that can grow over time."
Q2ebanking's Flake offered some optimism for credit unions when it comes to mobile services, suggesting CUs have an advantage over the major banks in that they "don't have nearly the geography to cover" and that fields of membership give CUs a greater understanding of who will be using the technology and what types of features to offer, which can help control costs of launching such a platform.
In addition, he noted, "for what it costs a credit union to paint and redecorate a branch, they could most likely execute a mobile banking strategy."
Jim Hanisch, EVP at CO-OP Financial Services, pointed out that even as mobile banking becomes that "must have" offering, many smaller FIs are still trying to determine the ROI. Hanisch agrees only in part with the 1995 Internet analogy, believing mobile may see a much faster adoption speed, since many consumers already use it.
"You can avoid a lot of expense getting in later, but you don't want to miss the market," cautioned Hanisch.
For marketing consultant Paul J Lucas, "the scariest part about mobile banking right now is the increased emphasis on real-time data. Most banking software is not designed to provide data on a real-time basis, and security protocols are not designed to protect against fraud in a real-time environment. But this is a speed bump, not a barrier to more and better mobile banking services delivered in real time." (See related story on mobile banking and security.)
40,000 Users At MACU
Mountain America CU in Utah has already launched a mobile platform, with more than 40,000 members making use of it. While SVP of e-Services Tony Rasmussen conceded that there are certain risks associated with it, he pointed out that "financial institutions in general are in the risk business, but we have to find a way to do it well."
"Increasingly, small and mid-size financial institutions will need to compete in large measure with the big banks," said Rasmussen. "Because, at some point, I think, the convenience is going to weigh heavily with that. Credit unions have a great opportunity to mix the technology and the ability to offer the same things the big institutions are offering, but coupled with unparalleled loyalty and service. Credit unions are uniquely positioned to do well in this space, if we do it right."