How The World Has Changed In 10 Years
WEST PALM BEACH, Fla.-Until the mid-1990s, going online was typically thought of something annoying and to be avoided. All that began to change in 1993 with the release of the Mosaic Internet browser.
The Internet transformed credit unions in many ways. Long-time laggards behind banks on the technology curve due to costs, credit unions suddently found themselves able to leap ahead of the banking industry via the Internet.
During the latter half of the 1990s, credit union conferences were filled with fear (emerging "new economy" competitord) and promise (even the smallest credit union could be as big as Citibank). Along the way some credit unions led the race, others struggled to keep up, and some have yet to enter. At the invitation of The Credit Union Journal, on these pages readers share their early memories of the Internet, the first online decade, in addition to thoughts on what might be ahead.
Early On, Not Much To Do
My first experience with the Internet was in 1990 when very few were online. There wasn't much to do and sites were not user friendly. I thought the web was slow, clumsy and boring and of little use to me. It was only later that I realized its potential. In 1995, I was with an organization that used the latest technology on the web for educational purposes. I saw a whole new way of presenting timely and meaningful information in a way that would engage people.
As for misconceptions, I thought the web would be the death of proprietary systems such as AOL.
I think e-mail will continue to be the Next Big Thing or "killer app." When was the last time you actually printed a document and wrote "memorandum" at the top? And how do you communicate with your colleagues and business partners? E-mail can be edited, catalogued, searched, shared and contain attachments, graphics and links to other sources of information. Though the entrepreneurs will continue to search for that next killer app, we'll be using this one hundreds of times a day
Lee Campbell, E-commerce Manager
Pentagon FCU, Alexandria, Va.
Saving An Eight-Hour Drive
Speaking from a member's perspective, we lived about eight hours from the nearest branch of our credit union, Brazos Valley Schools CU. When they added Homebanking, it was such a convenience. I managed an ISP from 1997 to 1999 and it is amazing how much the Internet has grown (a long way from Mosaic).
For CU's, their websites are a great resource for members. E-mail has become a great means of communication, but yet sometimes is not answered timely enough. The Next Big Thing will involve wireless and handhelds or cell phones.
Texas Credit Union Service Centers, Inc.
A Branch System As Big As Any Bank's
I personally think the web browser is one of the most powerful tools CUs have to be competitive today. The ability for members to reach their CUs 24 hours a day and have access to their money has helped level the playing field. CUs can compete successfully without having the branching system of a Bank of America, and can provide their members the convenience of anytime access to their money in a fashion that rivals a Wells Fargo or even a Charles Schwab. The Internet has provided credit unions with a safe, convenient and viable way to better serve and retain its members.
Norton Community Credit Union
At First, Like Something Out Of The Jetsons
The World Wide Web! I must admit that at first it seemed like something off the Jetsons...nice in theory but extremely unimaginable and impractical. Boy was I "too inside the box!"
But today, imagining life without the Internet is extremely hard to do. For businesses, in particular credit unions, it opens a whole world of new opportunities, literally. Traditional marketing and service limitations have almost been eradicated, giving way to a true "have it your way-when you want it" relationship with our members. The opportunities are endless and the benefits infinite.
However, life has a way of coming full circle, and the next big thing-simplicity and longing for the good ole' days! Knowledge is power. Power is pressure and pressure is sometimes uncomfortable. By our very nature we, human beings, will not be able to keep up with it all...
Kimberly London Plant
Executive Programs & Projects Administrator
La Capitol FCU, Baton Rouge, La.
Early Signs Of The Potential That Was Ahead
There were several things that happened that made us see the possibilities of the Internet.
First, when we allowed eligible people to join Pentagon Federal Credit Union online, using any credit card, the volume jumped a hundredfold and is still growing. Second, when we saw the data that showed our membership growing, internet transactions growing, loan and share volumes growing, at the same time that our costs were going down, we knew the internet was a home run.
Frank Pollack, President
Pentagon FCU, Alexandria, Va.
The Early, Risky Prospects
Early adopters of technology changed the playing field for everyone. For credit unions, investing in home banking in the mid- nineties was pretty risky. It was expensive and no one knew for sure what the payback would be.
Who would have thought that members would adapt so quickly? Now, most credit unions have a web presence in one form or another. It has allowed credit unions to span geographic territories and service their members regardless of where they are located. One thing we did learn, however, is that there is always a need for a concerned person at the end of the telephone line...the Internet will never replace human interaction.
Home banking has become a commodity, portals don't provide the "stickiness" it was thought they would, and members can pay their bills on any of one of dozens of web sites, including the billers' sites.
I think the "Next Big Thing" is going to take place in person-to-person payments, probably in the wireless space.
Christine Vincent, Director, Strategic Initiatives
Mid-States Corporate FCU
Surprising Number Of Effects
The credit union industry and the way members view their credit union has changed and will continue as technology evolves. From online banking, e-statements, automatic billpay, online loan application and the approval process has become easier and approval time in some cases is within minutes. The direct benefits that credit unions can enjoy are as follows: The member does not need to visit the credit union to do business, this has a direct result in a reduction in operating expense to the credit union and the members can benefit from lower rates on loans to higher interest rates on CDs and other types of financial services. Not to mention the way credit union facilities are being designed and constructed to incorporate new technology along with the new marketing opportunities to the younger generations.
David Ugrich, Manager of Business Development
McCloud Financial Facilities
New Berlin, Wis.
Amazing Implications For Effectiveness
Hard to imagine it has only been 10 years on the internet, it certainly seems much longer. For Section 705 FCU our web presence has certainly stirred up some interest from our "web-preferred" membership.
Here at Section 705 we certainly expected some common interest in our website, but the contribution it has made to the overall effectiveness of our credit union is amazing. Members are now calling us on what they saw on the website and with much more knowledge about our products and services than in the past. I think it gives them a sense of power.
We certainly have changed for the better with the use of the Internet. Typical paper forms are just about obsolete, reporting is now virtually instant and researching products and services comes on our time and not at the convenience of the "vendor," This research ability allows us to be well-prepared to negotiate and resolve issues that otherwise would have taken days to complete. Web groups and chat sites are useful and constructive. For example: the website cumarketingdept.com is a host of information and resources right at your fingertips. If by off-chance that the site doesn't have what you are looking for, you ask your peers and credit union workers around the country and they respond with help. Ten years ago this would never have happened.
Now of course all this is grand, but don't let the server go down or the T-1 lines go out or you will feel helpless and lost! I know, I have been there. But I would rather be helpless for a few minutes than go back to the old way any day.
Pamela R. Stelly,
Loan Officer/Assistant Manager
Section 705 FCU, Lafayette, La.
Online Advice Helping In The UK
I am a credit union development worker in the United Kingdom where a grand total of 0.1% belong to a credit union! We certainly have some way to go to reach the figure of 50%, which is the number of credit union members living in Ireland!
I signed up for The CU Journal and various other CU websites in order to increase my knowledge and regularly incorporate overseas success stories in my presentations to show how the future could be in the UK. Websites are also useful for exchange of views and ideas. The credit union I am helping out at the moment has increased in membership by 48% in the last 12 months so all the advice I received from the Internet must have had some use!
Leicester & County Co-operative Development Agency
The Next 'Next Big Thing'
The Internet has made it easier to speak and communicate with members and prospective members. It has reduced the importance of branch locations, and yes, above all current trends this still will take place down the road!
Regarding Next Big Thing, these will include all forms of wireless communications/marketing and messaging, new forms of live chat options/features, and 3-D virtual websites/e-branches. Moreover, in the future people will be born with a number-say a phone number-for life. The person will become the location not the person's location. One reason for this will be travel will be cheaper and made very easy to do. Furthermore, the sales data of an individual will be tracked and marketing will become totally individualized to that person's demos.
Paul J. Lucas
Imagining What Might Lie Ahead
I can remember 10 years ago when even Microsoft was new at developing the web browser. Our credit union used what was then called Netscape. This was not a fancy browser like we have today but delivered something to us that we had never seen before. Everyone thought that the future of the Internet would change the way we do banking, especially the elimination of branches. Well, we can see that this has not come true. It only added another convenient delivery channel to our list.
This new communication device known as the Internet has changed the way we deliver information worldwide. We can send not only mail instantly but also pictures, movies, and recordings. My daily routine of running the credit union includes the use of the Internet for e-mail, research, visiting websites for information or even ordering a product or service. We use it to book travel for staff and volunteers and to order flowers for special occasions and all in a click of a button. Ten years seems like only yesterday with so much being accomplished within that time.
I can only imagine what the next 10 years will bring. Perhaps it will help us identify our members and others with the use of Internet fingerprints such as eye retina patterns, palm and finger prints. Many of our members now enjoy Internet banking, bill payer, and e-statements. Oh what a difference this has made in their lives. Credit union members are becoming savvier when it comes to hands on experience with the Internet. This makes the future even brighter when it comes to using the Internet as a normal everyday working tool. Overall the Internet has become a good thing for credit unions. It depends on how we use and develop it.
Matadors Community Credit Union
Something New To Do In Your Dorm Room
Back in 1991, while I was still in college, I had a friend who was a computer science major. She had this great new trick that she could perform with her computer using only the telephone line in her dorm room. She could "call" other computer science students at various universities around the country using a simple telephone line and her personal computer. Using DOS, she and whomever she would be "calling" could type messages to one another instantly.
As her friend and fellow tech-junkie I was crazed by this new revolutionary technology and would constantly stop by her dorm room and type messages back to our new computer/college student friends from all over the country. At the time, there was no such thing as e-mail addresses, so we would connect via telephone to our university server housed in the computer science department of Ohio University to other college's servers and instantly communicate with whoever happened to be on-line at the time.
I remember that the students at the University of Texas at Austin and Stanford University were always very active in their messaging. (It's no surprise to me now that these two college towns are critical hubs for e-commerce development.) One on-line acquaintance of ours, David from Stanford, whom we communicated with quite regularly, found a more entrepreneurial use for this new invention. A few years later in 1994 David Filo became one of the creators of a popular Internet search engine we now commonly call Yahoo! I guess you could say that the true Internet community was born in college dorms all across the United States.
Needless to say, this early experience whet my appetite for the Internet and inspired me to make this tool applicable to my professional vocation-credit unions. In late 1995 I can recall securing a domain name for my credit union (Vacationland Federal Credit Union) at the time only to find that there were several other credit unions with the VFCU.org or VFCU.com domain and they had already beaten me to the punch and secured that identifier. This was truly an awakening to understand the pace at which this new technology was taking hold.
In 2000, Profound Communications launched an Internet website exclusively for CU marketers, www.itsprofound.com. We created the site to encourage the credit union community at-large to gather new ideas, network with colleagues and strategically position their credit unions' marketing function as a profit center. It made sense for executives to gather in an on-line forum to share ideas and strategies.
I've always thought that Henry Ford truly understood the age and times in which he was living and was able to fulfill a vision by creating a product which could impact others lives according to the needs of the times. His Model T automobile did just that. Now we are living in the electronic era and it's our calling to understand this age and times so that we may fulfill a vision of our generation to impact other's lives according to their needs. The Internet is our calling.
Tammy Schalk Holtzmeier, President
Profound Communications, Inc.
Hard To Keep Up With Today, Much Less Future
Just like anybody, including credit unions, the Internet has meant access. Access to information that before was relied on strictly in paper copy, access for their members to their own account without leaving the home or office, access to timely or instant information that could impact credit unions. The Internet has also opened credit unions up to access from unwarranted people (hackers and crackers).
The next big thing will be the gradual increase in consumer's usage of the Internet for all sorts of things from accessing financial institutions to the resurgence of certain offerings (groceries, etc.) that were being offered in the infancy of consumer internet. The next big thing will probably be more on the lines of more open communication and media that will bring the world even closer together than the internet already does.
I think for consumers, e-Bay has been the most successful as a world wide garage sale. If you want it, you can probably find it there. I'm not sure what else to share. I have not kept up with the future as opposed to just trying to keep up with what is here today before it changes tomorrow.
Vice President of Financial & Technology Resources
Texas CU League, Farmers Branch, Texas
One In Three Members Visits Online, But...
Today, one of every three accounts at Ent Federal regularly uses our online banking application. As Internet access becomes as common in American households as long distance or cable, the percentage of members wanting to access their account and/or their credit union online will only increase. Credit unions like ourselves have adjusted our unrealistic expectations of the dot-com boom, and now realize that the Internet will only augment -and not replace-other communication and delivery channels.
But that doesn't mean that we won't leverage the time and cost saving opportunities that the Internet offers us both in servicing our members and in the development of web based tools that allow the credit union to work more efficiently and effectively.
Victoria Selfridge, Manager of eCommerce
Ent Federal Credit Union,
Colorado Springs, Colo.
Lots Of 'Experts' Got It All Wrong
Like most new things, the impact of the Internet was considerably overblown 10 years ago particularly in the financial services arena. You may recall many "experts" were predicting web-based financial institutions were not only going to tilt the playing field for financial institutions, they were going to move the field to a new city. There was no way old-style banks and credit unions could possibly compete with the new competition so long as they had the financial drag of the brick and mortar branch network. The prevailing logic at the time was the new competitors had a competitive advantage of low operating costs and all they needed to do was attract the critical mass of deposits and loans before the old, stodgy banks and credit unions could ramp up their online alternatives and they will be on their way to transforming the delivery of financial services forever. The only problem was everyone forgot to ask the only expert worth consulting, the consumer.
VP Strategic Business Development
Research and Advisory Services
CUNA, Madison, Wis.
What It Has Meant To One League
The Internet has enhanced the league's ability to meet our objectives of providing our member credit unions with timely information and prompt service. For example, a few years ago we consolidated all departmental mailings into a single weekly mailing called League Pack. Now the contents of League Pack are available to our credit unions through our website.
Additionally, online registration allows busy credit union staff to sign up for conferences outside business hours. We also constantly update our website to bring our members the latest news, and information on business and educational opportunities.
As an association president who's on the road about one-third of the year, I value tremendously the ability to get fresh news via the web. The Internet is also indispensable for me in sharing and transmitting documents. I'm hardly ever away from the office now without my wireless e-mail handheld, which is even more convenient than voice mail. It allows my staff and I to communicate with each other instantly, and when a quick decision needs to be made, this is invaluable.
Dave Chatfield, CEO
California/Nevada CU Leagues
Rancho Cucamonga, Calif.
The Emerging Benefit (And Pain) Of E-Mail
The Internet has changed many of the routine activities and altered the service delivery options for credit unions. Like all businesses, credit unions have recognized that instant communications with employees, members, officials and vendors is both a blessing and a curse.
The speed of communication is a benefit, but the sheer volume of e-mails and the extensive content of many are often a distraction. In addition, there is always the unwanted and repeatedly offensive e-mail that arrives at most mailboxes.
An emphasis or reliance on Internet services and related technology can also alienate some members. Frequently, members who prefer to speak with a live person at the credit union are not able to easily choose that option. The telephone message on hold will often state, "For faster service you can now conduct your transaction at our web site www.cusite.coop. However, if you choose to speak with an operator, please stay on the line. Your call will be answered in the order it is received."
For progressive credit unions, the "Internet Branch" has developed as a viable alternative for busy members and others who enjoy the convenience of doing credit union business on their time. Properly positioned, it should generate more business for the credit union at less cost. At Electro Savings Credit Union, the directors receive regular board reports on the activity and profitability of the Internet branch. Like many credit unions, the services include Internet banking, bill pay services and online loans. There is a branch manager with responsibilities similar to those assigned a branch manager at a physical branch.
While all credit unions can benefit from an Internet branch, those that recently received community charters have been immediately able to use the credit union's website as a cost-effective channel to reach residents in the community.
Howard H. Hoemann
Vice President, Sales & Marketing for Digital Dialogue
Board Member & Secretary
Electro Savings Credit Union, St. Louis
For One Corporate, Hard To Live Without It
The Internet has become an important delivery channel for many of EasCorp's products and services. Although it has only been a few short years since EasCorp was the first corporate to use online check image technology, it is hard to imagine doing without it today. Our member credit unions tell us their members love being able to promptly and easily access share draft images and statements. And we appreciate the convenience of being able to quickly provide members with important information via e-mail.
Jane C. Melchionda
Easter Corporate FCU
Bricks Assisted By The Clicks
The browser and the Internet have made credit unions players in the financial arena. None of us have enough capital to use the brick -and-mortar strategy. The Internet has given us a potential front door on everyone's desk, at a cost we can afford.
Chief Administrative Officer
Pentagon FCU, Alexandria, Va.
Early Needs Were Obvious
My first experiences with the Internet were born from my time as Director of Information Services for a credit union.
Early on, we used the Internet to search for information. As a competitive financial institution, we could see the need to have our information available to those members who were early adopters. So, the credit union created a website-and we staked our claim on the Internet. For our members, the Internet was great for research and communication-but that was about it.
As the Internet grew, so did the technology around it. And it was the new technology that was coming out that really started to make a difference to the IT activity at the credit union. We started to create VPNs and secure ftp sites-now we're talking. Gone were the days of cutting nine-track tapes for monthly statements or credit bureau files. Simply connect through your Internet browser to the vendor's host site and fire away. We were able to move huge volumes of data across the Internet "Super Highway"-all from the cool comfort of the computer room-who wouldn't love the advancement of technology?
The other side was the advancement of the browser and what we could do with it in the front office. The browser became the front-end for loan origination systems across the Internet- credit unions now had the ability to partner with state-of-the-art companies that offered an Internet-based loan application and decision engine. Loans could be approved in seconds, not hours or days.
And now, we see that browser technology is ideal as a front-end solution for teller, new account, and call center activity. By using browser-based technology your credit union can cut training time and costs because it provides a level of comfort to new employees who are already familiar with browser technology. And, from an IS perspective, browser-based technology translates into more manageable software releases and reduced hardware costs. For instance, Aurum's new ViewPoint suite provides comprehensive branch automation, CRM and business intelligence through an easy-to-use, inexpensive-to-maintain browser-based technology platform. With this type of technology solution, using the tools born from the Internet boom, it becomes feasible to fully integrate all your technology solutions which speeds processing, manages workflow, and automates tasks.
Credit Union Product Manager
Aurum Technology Inc., Plano, Texas
The Picture Mosaic Painted
I first became aware of the Mosaic browser in 1994, having already used more arcane Internet access methods like newsgroups and bulletin boards for some time. This was long before the Internet's explosion on the popular scene, when it was primarily valued by "techies." I recognized that Mosaic and the many popular browsers that followed would open up this resource to a wider audience -although aside from Mark Andreessen, I think few of us realized its full potential. More importantly, I recognized the browser's potential to enable "non-techies" to make information available on the Web, fueling immeasurable business uses.
Starting with static sites like most early adopters, we soon viewed the browser as a new way to create user interfaces and the Internet as a new service channel. After I joined USERS, we became one of the first core processors to offer both pure Internet products like home banking and browser-based software applications for teller, lending, card management, and other key functions. The use of the browser as a front-end interface has given credit union staff tremendous access to data and transactions in a familiar environment.
I've thought for some time that the next "big thing" would be the emergence of user-friendly tools allowing individuals to personalize the user experience. Sure, it can be accomplished today, but it requires far too much expertise. Soon, I expect every staff person will be able to place the functions they need on their personal screen, in the positions they prefer.
Valley Forge, Penn.
The Emergence of New Dilemmas
Although this is the 10th anniversary of the web browser, much of its growth has occurred in the last five years. In 1995, only five CUs had websites. Today, we know at least 60% have websites, and that figure may be higher.
The Internet has evolved so quickly that it has gone from a way of creating a competitive advantage for companies to something that is required for competitive parity. Ten years ago, companies that had a website were considered ahead of the curve; today, those that don't are way behind.
For individuals, the web has gone from something that people didn't understand or know how to use, to something they now take for granted in their personal and professional lives. It has virtually eliminated the traditional hard copy in-basket. People expect companies to have a website, whether it be their local credit union or a Canadian fishing outpost.
The web is more than just a technology tool. It has become a channel for doing business in and of itself. Much like the telephone, which evolved from simply a communications tool to a distribution system.
For CUNA Mutual, the growth of our website is not tapering off. It's accelerating as we add new users, more content and more services offered on-line.
Despite its tremendous growth, we're amazed at how much untapped potential still exists. Nobody knows how advanced the web will be in another 10 years, but we're certain businesses will get better at leveraging the Internet to conduct business. The dilemma will be determining how much emphasis they put on the Web for sales, service and marketing versus other channels such as mail, telephone and face-to-face.
One prediction: By 2008, all financial institutions will have websites, because those that don't will have failed.
Vice President, Web Channel Development
CUNA Mutual Group, Madison, Wis.