It's all fine and good that there's an app for that – but that doesn't mean the consumer will actually use it. And no, there isn't an app for that.
"The ultimate challenge to developing a habit-forming application is to somehow solve the user's pain by creating an association, so that the user identifies the app as the source of relief," said David Dean, chief operating officer for the Woodland Hills, Calif.-based CU Wallet. The firm provides mobile technology platforms for more than 100 financial institutions.
"Beyond that, the dizzying marketplace has led to app fatigue, which stagnates usage rates as the hassle of updating, enrolling, provisioning and concerns about security and permissions cause credit union members to be wary and uninterested," he added.
According to results from a Mid-Year Consumer Survey by Georgia Credit Union Affiliates, 48% of respondents said they don't use a financial app. The 51% who do use an app do so for basic banking needs, such checking account balances.
"Members now measure the value of their digital experience with their credit union based not on what they might get at another credit union or bank, but rather with the level of convenience provided by Amazon, Apple, Google and others," said Michael Carter, chief market analyst for the Omaha, NE-based D3 Banking, which provides data-driven digital banking solutions.
"This means credit unions must study developments in the digital space outside their space to understand how better to drive mobile adoption and use," said Carter.
Advanced App Features
The Hamburg, Germany-based Statista is forecasting that nearly 223 million U.S. citizens will own a smartphone in 2017. And according to The Board of Governors of the Federal Reserve System's 2016 Consumers and Mobile Financial Services report, 43% of all mobile phone owners with a bank account had used mobile banking in the year prior to the survey, an increase of 4% from 2015.
The report found that the three most popular banking app features used were: checking account balances or recent transactions (94%), transferring money between an individual's own accounts (58%) and receiving an alert from the financial institution bank (56%).
To increase member app usage rates, Carter said CU's have to focus on convenience and form factor. But increasing the usage of advanced banking app features remains a challenge.
"The level of interest in using advanced features is a close second to form factor. Personal financial management applications are used regularly by less than 20% of the population in the United States," said Carter. "The reason is an overwhelming majority of Americans do not have the desire to or luxury of managing their finances."
When redeveloping a financial app, Dean advises clients not to build a better mousetrap, but a faster one. He said there is often a gap between what credit unions think their members want and what their members actually want.
"Saving members time is the most essential key to successful usage rates," said Dean. "Accomplishing this for mobile requires cutting edge design and a flawless user experience, which can be challenging when adding advanced features to a mobile banking application that was not originally architected with these features in mind."
Is App Usage A Demographic Issue?
While millennials will skew financial app usage rates higher, Carter warns CU executives not to "fixate" on millennials. Conceding that this people in this generation are "great consumers" of technology, he said that it was their parents—mostly Baby Boomers—who first adopted digital technology and apps.
"There are simply too many articles written in the industry today that make it seem like millennials are all using everything from digital money to virtual reality, while their parents are still operating antiquated technologies," said Carter. "The truth is millennial actually tend to use cash more than boomers and boomers are heavy adopters of apps that provide a level of convenience that simplifies their lives."
Dean added that millennials have more of an appetite for trying and using new mobile solutions, but their patience trends low and their expectations trend high. "Betting solely on the younger users to generate increased usage of mediocre apps is a losing strategy," he said.
In many instances, experts will cite security as a leading issue for low app adoption and usage rates. Carter, however, believes consumers value convenience more than security.
"Obviously, credit unions must provide highly secure mobile apps; however, adoption and use will depend on the convenience levels the apps provide," said Carter. "Forward thinking credit unions should have RDC and biometrics already available in their apps with voice activated banking, such as Alexa, OK Google and Siri, in the release schedule for the coming year."
