Where Do CUs Not Trail Banks? E-Services, But Caution Abounds

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SAN DIEGO-Despite a significant budget disadvantage, credit unions are on par or even ahead of their big bank competitors in the e-services battle.

"Because we are smaller and more nimble in this area we can move faster to adapt new technologies," San Diego County CU SVP of e-Commerce Loretta Weller-Mowers explained.

While popular perception may paint credit unions as stodgy and old fashioned, many are actually surpassing their bigger bank competition in terms of online offerings, investing in technology instead of bricks and mortar. The number-one complaint against credit unions has been the lack of convenience, but rapid adoption of e-service solutions has helped overcome that objection, said CO-OP Financial Services SVP-Business Development & Marketing Caroline Lane.

"I think [CUs] do a pretty good job in providing similar functionality to all but the biggest banks offer," she added, noting the strength of remote deposit and image capture. "A lot of credit unions are deploying that; we've seen very good adoption from many of our clients. That's not something a lot of banks are doing at all."

Credit unions have been a bit slower out of the gate than their banking counterparts with mobile banking, but many of the early mobile applications were little more than vaporware, Lane added. CUs have since done a solid job in waiting until the delivery channel was ready and then quickly adopted the new and useful technology. While the biggest banks have sufficient capital to invest and potentially surpass credit unions on the e-services front, uMonitor President/CEO Dinesh Sheth believes CUs are better suited to pick up consumers who have left those big institutions in the wake of the financial crisis

"I think, overall, that CUs are a lot more prepared than community banks to serve the new members that are coming from larger banks and looking for a more trustworthy institution to deal with," he said, crediting many cooperatives for deploying a "true virtual branch" capable of online and mobile banking, real time decisioning and electronic lending applications.

Existing members are responding to CUs' emphasis on e-service solutions. as well. Strong marketing campaigns at Nassau Financial FCU, Westbury, N.Y., has helped boost Internet banking adoption from 15% of membership in 2009 to 20% today, while eStatments users have jumped from 8% to 11% and bill pay rose slightly from 6% to 7%.

CIO Robert Reh noted that videos to boost cross-selling, education and make announcements would likely be added to Internet banking in 2011.

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