Our CU is considering implementing mobile banking? What do you advise for success, or would we be wise to wait?
David McConney, EVP/General Manager, Credit Union Core Systems, Harland Financial Solutions, Pleasanton, Calif.
The answer is yes, you should consider implementing mobile banking as long as your members need it. To determine whether your membership needs it, and will use it, the first step is to ask them. Survey your members. If provided mobile banking, what will they use it for? Do they want to perform transactions? View balances? Pay bills? All of the above. Do they want the same functionality you currently offer them with Internet banking? Once determined, assess your competition and again make sure you offer a feature-rich solution that matches your competition.
Browser-based solutions can offer a number of advantages. They are typically compatible with a variety of phones and/or devices, require no specific carrier, do not require any downloads, and are cost effective and quick to deploy.
A "soft launch" is always recommended prior to an external launch. The launch can include information about the new service on the credit union's website, promotional mailings/stuffers and materials in branches.
There are a number of mobile banking solutions currently offered in the marketplace. The challenge is to seek out the right solution for your members and one that is secure.
John San Filippo, Marketing Manager, Symitar Systems, San Diego
As Bob Egan, chief analyst at TowerGroup, said about mobile banking, "It's not a matter of if; it's a matter of when." Unfortunately, the "when" is going to be different for every credit union.
Credit unions were the original early adopters of mobile banking technology, deploying solutions as early as the Spring of 2000. However, for the masses, the timing just wasn't right. So what's changed since then?
First of all, the technology is significantly better. Both bandwidth and functionality have taken major leaps forward. Second, the demographics have changed. People who were in junior high in 2000 are now entering the workforce, and many of these people live and die by their mobile phones. They expect to be able to run their entire lives from their phones. In other words, demand is on the rise.
It's the demand at any particular credit union that will govern the "when." For example, demand at a community credit union in a college town may rise early, while demand at a single-sponsor credit union affiliated with a manufacturing plant may rise much later-if ever. The key to success here, as in any other product launch, is intimately understanding the wants and needs of your members.
One last word of advice: when the time comes to deploy mobile banking, I strongly suggest that you look to a technology partner whom you already trust, and who already understands your unique business.
Christine Pearsall, VP Marketing and Sales Support, Summit Information Systems, Corvallis, Ore.
It's hard to ignore that we have become a cellular nation. Almost 73% of Americans have cell phones-or nearly 90% for ages 18-24. In response, mobile banking technology has reached a point of critical mass and cost competitiveness. Earlier this year, Online Resources launched an OFX-based mobile banking solution. MShift has about 30 credit union clients, most of which deployed MobileShift either in-house or ASP, within the past 18 months. CheckFree partnered with Firethorn to offer comprehensive mobile technology security and functionality. These solutions can support as many as 7,000 different mobile devices and practically any wireless carrier. Market opportunity and technology readiness have arrived. Who can imagine joining a credit union that doesn't offer a comprehensive Internet banking service? Soon, it'll be the same with mobile banking.
A successful mobile banking strategy should match the credit union's membership demographics and Internet banking penetration. Credit unions with successful Internet banking programs (above 50% penetration), could offer mobile banking with comparable features such as balance inquiries, alerts, transfers, instant messaging, and branch/ATM locator services, as a compliment. For credit unions with fair success (30-50%), mobile banking could succeed as a complimentary channel for Internet banking-type transactions along with alerts and locator services. For those with low adoption rates (less than 30%), mobile banking could in fact be an alternative to Internet banking altogether, particularly if the credit union seeks to improve its services for low-income or underserved members.
Terry Treadwell, CPA, Tampa Bay, Fla.
You should definitely begin your research processes now-with more than 200 million wireless subscribers in the U.S., wireless has surpassed land line usage. Mobile banking is not a question of if it should considered but rather when and what functionality to start with. A recent survey conducted for CheckFree by MQA Research, found that 49% of 1,023 respondents would use a mobile banking and payments application if offered to them. Approximately 70% said they would prefer to receive the service from financial institutions. It was no surprise that consumers in the 25 to 34 age group expressed the most interest in mobile banking and payment services.
How quickly and what functionality you roll out depends upon the make up and demand from your existing member base however at a minimum you could plan starting with basic eAlert and IM functionality, with messages sent to a wireless device like many credit unions are already doing.
Get a big picture perspective of mobile technology in banking, from the document, "Mobile Financial Services-Business Ecosystem Scenarios & Consequences" by the Mobey Forum (www.mobeyforum.org), a think tank promoting the use of mobile technology.
Eric Panepinto, COO, USERS, Valley Forge, Penn.
Our CU is considering implementing mobile banking. What do you advise for success, or would we be wise to wait?
Mobile banking has evolved in much the same way as Internet banking. Fifteen years ago, Internet banking technology was ahead of the consumer devices needed to use it, since many consumers didn't have PCs at home at the time. Fast-forward to today, and about two-thirds of American households have PCs, with many owing more than one device thanks to their increasing affordability. Mobile banking has taken a similar path. Banks attempted to offer this service at least a few different times over the last 10 years, but cell phone and PDA technology wasn't capable of supporting it fully. Now, the technology behind these hand-held devices is catching up, at about the same time that consumers are growing increasingly comfortable with using the devices. So the time is definitely right to begin planning a mobile banking initiative. By establishing the necessary infrastructure now, your credit union will be ready when your members are ready. Initially, you may need to promote the service aggressively to drive consumers there; but once they try it, it's likely they'll be hooked on this opportunity to truly transact their financial business anytime, anywhere.
Does your panel have any experience with a technology that might really be effective in serving low-income members?
Paul Leahy, CRA/HMDA Product Manager, Wolters Kluwer Financial Services, Minneapolis.
There are a variety of tools credit unions can use to help them serve the underserved. Credit unions should look for software with powerful analysis tools that allow them to plot their lending against the demographics of their market area.
From this they can identify areas of underperformance in lending to low income borrowers and areas.
The credit union, through the use of embedded peer mortgage and small business lending data along with population and business demographics, can also identify market opportunities for their existing and potential areas of operations.
This analysis can be plotted on dashboards and maps, as well as custom executive reports.
From this analysis the organization can create marketing campaigns targeting underserved areas.
Typically these marketing campaigns include paying extra incentives to brokers for making loans in these areas and to this demographic of borrower.
Other software available allows third-party lenders to identify whether or not the loan they are about to close will qualify for the special loan program and earn for them extra basis points. This creates an obvious incentive for the third party lender to approve such a loan but also creates incentives for them to target this type of audience in the future.
Eric Panepinto, COO, USERS
Several technologies can help you serve low-income members effectively. Even low-income consumers are likely to have access to the Internet, so consider leveraging this channel to reach out to prospective borrowers. The Internet is ideal for offering products like pay-day loans (a better alternative to predatory lenders) and debt consolidation loans (a situation in which some consumers would prefer not to apply face-to-face).
The Internet offers the advantage of being a "face-less" channel that eliminates the awkwardness of discussing debt issues with a loan officer, while still enabling your credit union to conduct the necessary identity verification and other fraud-related checks.
Another technology to consider in reaching this segment is the stored value card, which can be very beneficial for consumers without a share draft account. You can help them build a better financial foundation by offering other financial services as a reward for using the stored value card prudently for a specified period of time.
The card also can be an enticement to SEGs that don't want to incur the cost of cutting checks for low-income employees who don't have share draft accounts. Instead, those members can use the stored value card at your ATMs to get cash as needed.
John San Filippo, Marketing Manager, Symitar Systems
Regardless of their motives, check cashers and payday lenders are filling an obvious need in the underserved market. Credit unions are in a unique position to take business away from these companies, provide valuable financial services to the underserved at non-predatory prices, and cultivate at least some of this segment into profitable, long-term members.
When the market asks for previously unheard of products or services, the question always becomes: Can my core system handle it? If my core system isn't designed to handle it, can I customize the core system to handle it? If the answer to either of these is yes, it just becomes a matter of planning and execution.
For example, several Symitar clients offer payday loan alternatives that are facilitated entirely through their core platforms. A number of CUSOs owned by our clients have also made headlines by getting into the check-cashing business.
In the end, it's just like so many other emerging areas of the financial services industry. A powerful, flexible, customizable core system will generally get you where you need to go.
Readers: Ask CUJ Technology Panel Experts
Readers can leverage the Credit Union Journal's panel of technology experts by submitting any technology-related questions to the panel Managing Editor Lisa Freeman at lfreeman
