ANTIGO, Wis. — The "mobile-only" consumer, those conducting all of their remote banking activity via a tablet or smartphone, are growing in number — quickly becoming a group that industry insiders and analysts say credit unions must cater to and support.
Two credit unions are doing just that: Pentagon FCU has created an application to streamline the mobile experience and add greater functionality; and CoVantage CU is improving mobile security.
Both efforts pave the way for what someday could become the largest segment among mobile bankers, industry experts say.
CoVantage, which is piloting hardware-based security technology to authenticate high-fraud-risk mobile banking transactions, sees the handwriting on the wall: a wave of mobile-only users are headed the CU's way, just looking at mobile banking traffic growth.
"We project that within two to three years mobile will be our largest [transaction] channel," said Bob Van Abel, SVP CIO at the $1 billion CoVantage. "It's growing that fast."
Mitek predicted that this year financial institutions will reach a tipping point, with more organizations starting to market directly to mobile-only users.
CO-OP Financial Services, Rancho Cucamonga, Calif., recently partnered with Plano-Texas-based Alkami Technology to bundle CO-OP Bill Pay with Alkami's ORB Platform, bringing more banking options and a better user experience to the CU's mobile offerings. The move, said Kim Hester, EVP of financial solutions at CO-OP, appeals to the mobile-only user and will deepen relationships with all mobile banking members.
Ralph Marcuccilli, president of Allied Payment Network in Fort Wayne, Ind., said client data indicates that 20% of mobile banking users are mobile only, "and that percentage is steadily climbing."
David Albertazzi sees similar growth, pegging the percentage of account holders who conduct mobile-only banking in the "teens." The senior analyst at Aite Group in Boston has spotted a shift in how financial institutions are catering to this consumer segment, saying many of those launching second-generation mobile solutions are no longer requiring online banking registration before granting mobile access.
"They are just letting consumers register for mobile banking. This is a big change in thinking," Albertazzi said.
What the mobile-only user needs, say industry insiders, is an experience that is simple to manage on smartphones or tablets. That means the mobile experience cannot just be an extension of their home banking system.
Many FIs in the last year have focused on improving the mobile interface, but now improving the mobile experience includes not only better usability, it calls for adding more sophisticated banking features, such as integrated bill pay or even financial management tools.
In Alexandria, Va., the $17 million-asset Pentagon FCU recently launched its enhanced mobile app, available for download for iOS and Android devices. The tool includes faster and easier navigation, mobile check deposit, ability to check the status of loan or credit card application, make payments to a PenFed loan, mortgage, or credit card account, and transfer funds or schedule recurring transfers between accounts inside or outside the CU.
"This redesign allows us to serve our mobile members in a more robust way," said Ian Harper, EVP and CIO. "People are asking for this."
PenFed eliminated the browser in favor of an app tailored to the services the CU is providing via mobile devices.
"The channel may utilize the same back-end processes as my web front end, but it is built around the form factor of the tablet and the smartphone," Harper said.
Early results indicate the new app is not cannibalizing PenFed's online banking traffic, and the CU is seeing remote transactions grow as a result. Plans are to add more mobile banking services within the next 18 months, but Harper says the additions would likely never include services that come with lengthy reading materials, such as a mortgage agreement.
Security concerns around the mobile device, analysts have stated, are preventing some consumers from embracing mobile banking. Understanding the appeal of mobile, and the growing mobile-only segment, CoVantage is addressing the issue today.
Since September, the CU has been piloting Tyfone's hardware-based security technology to authenticate high-fraud-risk mobile banking transactions with a small number of staff and business banking members.
Using Tyfone's SideSafe Connected Smart Card, a micro SD card that connects via USB to a smartphone, participants are using SideSafe with their Android-based smartphones for authentication of two different types of high-risk mobile banking transactions: changing their passwords and adding or removing bill payment vendors.
CoVantage's mobile banking service is app-based. "Because smartphone users download a lot of apps from different sources, there is a security risk in banking on smartphones," asserted Van Abel. "By using SideSafe, we eliminate the risk of someone hijacking a customer's account by changing their password."
The smart card stores a digital certificate and user credentials on a chip. It authenticates the user by conducting a two-way request/challenge/response authentication session with a host server.
"This contrasts with the traditional password-based, one-way request/response authentication method, which consists of a user sending a password to a server for verification against its database of centrally stored passwords," said Van Abel. "In other words, I give you my password and because you don't have my phone and you log into my account for a high-risk transaction, you are not successful."
Besides keeping the credit union ahead of fraudsters moving into the mobile space — a channel that has yet to receive cyber thieves' full attention — the CU says the technology does not get in the way of the mobile experience since the authentication works in the background. Van Abel said any fraud-fighting technology can't get in the way of a seamless mobile experience, which is what users want.
Mobile bankers are also clamoring for mobile bill pay, a service that is taking off. Sarah Clark, senior director of products at Mitek, San Diego, noted Javelin recently released statistics that show mobile bill payment usage has doubled from 8 million in 2012 to 16 million in 2013. And according to the Brookfield, Wis.-based Fiserv's annual Mobile Bill Pay Benchmark study, billing companies are having a difficult time keeping up with the swelling popularity of mobile bill-pay services.
CO-OP Financial Services is well aware of members demanding mobile bill pay, and the needs of the mobile-only member, something that influenced its partnership with Alkami. CO-OP's Hester said the new platform delivers users the same home banking experience they get on a PC via the mobile device.
"Users get a customizable interface and are able to perform more transactions and do them more easily, such as integrated bill pay, funds transfer, or use budgeting tools," she said. "It really brings personal financial management to the mobile device."
Like Hester, Allied's Marcuccilli understands how mobile bill pay deepens relationships and appeals to the mobile-only user. Allied's Picture Pay, driven by Mitek's Mobile Photo Bill Pay, lets users pay bills by snapping a picture of a bill with their mobile device.
Marcuccilli said Allied's FI clients have seen a 5% to 15% month-over-month growth in transactions since introducing Picture Pay. "And 50% of Picture Pay users were not users of online bill pay, making them mobile-only bill pay customers. Picture Pay also increased customer stickiness by 10 percentage points, taking retention rates for bill pay users from 88% to 98%."
Marcuccilli attributed much of the results to mobile users not having to key in bill pay information./p>
"This replaces the keyboard. Users snap a picture of the bill and the system reads the bill's info, sets up the biller, enters that account number and makes sure the payment gets routed properly."
The $765 million 3Rivers FCU in Fort Wayne, Ind., has added Allied's Picture Pay and sees the move as something necessary to serve the fast-growing mobile segment and those who only use their mobile device for financial services needs.
"Members want mobile bill pay to be easy, just snapping a picture," said Melissa Shaw, marketing communications manager. "We have had mobile bill pay for six months and members are more satisfied with our mobile offerings. They feel it is a more well-rounded solution."
Every day more people migrate more of their banking transactions — and needs — to the mobile device, growing the ranks of the mobile-only member, noted Shaw.
And that total is not going down, with sales of PCs falling steadily in 2012 and '13 and smartphone totals skyrocketing.
"It's a growing member segment and we see it growing at a greater pace this year," Shaw said.
