The pro: A credit union's website stands to gain from added shopping, sports, travel and investment functionality, according to Power 1 CU.
The con: Credit unions lose focus when they spend time dealing with a member's appliance warranty problems, according to First Tech Credit Union.
"As credit unions move forward, they need to figure out alternative products for additional profit," suggested Brian Warfel, senior vice president of e-business and communications. Power 1 CU, with 39,000 members and $245-million in assets, launched its portal site in March.
With freebie services as the norm, the competitive Internet banking arena has made it harder for credit unions to make money off traditional financial services. The solution for many a financial institution has been to reenter the arena as a portal, gleaning profit by acting as a gateway to added shopping, stock trading and travel product sets.
"We have a strong resolve to move into the e-commerce environment, for which the portal model is the best to use," Warfel explained.
Other credit unions think finances and shopping just don't mix.
Beaverton, Ore.-based First Tech CU, 83,000 members, is one of the skeptics. "I think it's a disservice to be dealing with issues surrounding why the crock pot the member ordered doesn't work," said Michael Scheuerman, chief technology officer at First Tech CU.
It's possible that there's gold in the portal approach, but Scheuerman thinks it could just be a temporary rush.
"I'm sure there are folks who have done this and have done it successfully," he said. "They see some positive financial return from doing it. They have the ability to retain members a bit more."
But Scheuerman points out that members are inherently less loyal to e-commerce vendors than they are to their financial institutions. He said members will be just as fickle shopping for hard-good products at a CU portal as they are at any shopping site.
"If I don't get good service, I can just as easily turn to 50 other shopping or information sites," he said.
The $810-million First Tech CU is a financial portal only, said Scheuerman, offering account aggregation and investment services in addition to home banking and electronic bill payment.
All in all, First Tech just isn't going for the e-commerce portal pitch. "I would be concerned that I'm perhaps diluting my efforts in providing the types of financial services my members need in exchange for short term gains," Scheuerman elaborated.
Back at Power 1, Warfel agrees that "the jury's out on whether portals are the way for CUs to go."
But Warfel said the portal model bolsters member service by enabling members to examine non-traditional credit union products, such as investment services, without going to another resource, Warfel said.
And so far, member-service issues have been minimal. About 80% of member inquiries handled at Power 1's Call Center are directed towards EBPP and home banking, while only 20% are related to portal issues, said Warfel.
In terms of functionality and design, Warfel insists that the portal concept will be the standard business model in three years.
"We like to look at what Internet space is doing," Warfel said, and then compare strategies.
Content is easily interchanged within the frame architecture of the portal model, and all services, including home banking, are always two clicks away.
"A portal isn't as pretty, but consumers see it as the much more functional model," Warfel said. "It's the navigation model people are getting used to," he added.
Online member surveys, revealing high interest in online shopping, travel, news and investing, confirmed Power 1's portal approach.
Warfel isn't saying that the portal model is going to guarantee member loyalty. "But it raises the stakes," he said.
The portal has maintained a 4% hit increase since its launch.
