ANTIGO, Wis.-CoVantage CU wants to stop Google, Apple and Chase from picking members' wallets by offering mobile banking with built-in mobile payments.
"Our end game is to offer the EMV standard over contactless NFC payments" from a new mobile wallet, beginning with a pilot project later this year, explained Bob Van Abel, SVP/CIO.
For the past year, the $1-billion CU has started by delivering basic-but unique-mobile banking functionality.
CoVantage is better prepared than most credit unions to capture the emerging mobile payments market because of a partnership with Tyfone, Van Abel said. The Portland, Ore.-based mobile financial transaction provider has built a mobile wallet and contactless payment memory card into the mobile banking foundation.
"Without mobile payments, mobile banking is just a website," Van Abel suggested. "Tyfone offers NFC-enabled memory cards for contactless payments that fit into any phone with a card slot, and that's exactly what we wanted to hear."
Phones without memory slots, like iPhones, "are a problem" that CoVantage is working to solve, he said.
Asked why CoVantage is going to so much trouble to offer its own mobile wallet as opposed to piggybacking on the Google or MasterCard mobile wallet, Van Abel said "it's important that credit unions, whose interest is in the community, not jump in with vendors who have their interests elsewhere.
Waiting For Contactless Tech
"It's detrimental for credit unions to ask members to enter their accounts into a proprietary solution like Google or MasterCard," Van Abel continued. "MasterCard and Visa want to capture the revenue from credit union mobile-payment transactions-and then move those same transaction accounts to larger institutions. They'd rather work with BofA versus the 7,000 credit unions in the country-it's just easier."
CoVantage is waiting until NFC contactless technology is widely available for mobile payments instead of starting with a person-to-person payment (P2P) solution, which so many CUs are deploying, said Van Abel. "The problem with P2P is that it's fulfilled by ACH, a high-risk transaction" that pulls money directly from a member's account.
With a mobile wallet and NFC transmission, transaction risk is lower because "authentication is tied to the NFC chip and the device, and if any money were exposed, it would only be the money that's in the mobile wallet," not the entire account, he said.
Mobile is particularly relevant to the CoVantage membership, a largely rural community without broadband, Van Abel said. "But we have 3G and actually some 4G connections, so you can pretty much get a data plan and coverage anywhere. In about two years, I think we'll see more mobile banking than Internet banking."
Mobile banking isn't just an extension of Internet banking at CoVantage-it's a separate strategy on a distinct platform, added Van Abel. That's why current members can enroll in mobile banking from the mobile banking site on a mobile device. Most CUs only allow members to sign up for mobile banking at the Internet banking site on a computer.
In fact, 300 members are "mobile only"-they aren't enrolled in Interent banking, he said. Those members complete all online transactions via a mobile device.
About 500 of the CU's 68,000 members use both mobile and Internet banking, and about 20,000 use Internet banking.
Improved Enrollment Management
"In some ways, enrollment is better managed through the mobile device than through the Internet," Van Abel said. Security is strengthened by the out-of-band authentication process that mobile enrollment demands. "We track your phone number to your phone. We send an e-mail link to complete the registration. That's two out-of-band authentication steps that we don't have with Internet banking."
For now, members can pay bills, transfer intra-institution funds and get alerts, along with other basic mobile functionality, using banking applications, the mobile web and SMS texting. Mobile deposit capture is on the way.
The Tyfone mobile banking platform is integrated directly with the CU's Symitar Episys core system.
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Subscribers can read related stories at www.cujournal.com by searching the following headlines:Saving IT: How CUs Are Cutting Tech Costs-March 26, 2012You Have A Payments Request: Facebook Moving Quickly-March 19, 2012Analysts: Get Moving Now To Compete In Mobile Payments-February 20, 2012 CoVantage CUwww.covantagecu.orgTyfonewww.tyfone.com
