Credit union executives at THE C-LEVEL have seen the writing on the wall about millennials for years, but a recent mobile-banking milestone has resulted in significant takeaways for the industry.
According to recent data from Salesforce Research, 75% of millennials use mobile banking for depositing checks, making transfers, bill pay and more. But what's most significant is this year the number of millennials (75.4 million consumers age 18-34) finally surpassed the baby boomers (74.9 million consumers age 51-69).
So why should credit unions care? Because each credit union needs its own tailored mobile suite that specifically engages all members. That, experts say, is the key to mobile success.
"Members want to use mobile only," said Robb Gaynor, chief product officer for the Austin, Texas-based Malauzai Software. "But the features have to be there or they will be forced back to the legacy internet banking site."
Serving 425 financial institutions, 100 of which are credit unions, Malauzai's stance is too many CUs make mobile mistakes by keeping the solution too simple and not building out features to match the existing online banking offering.
"With best-in-class credit unions reaching 35% or higher of their mobile users who no longer use internet banking, this is an imperative," said Gaynor.
Aside from not preparing employees and members for mobile roll out, many credit unions often take the easy route and launch a "wrapped-app," he said. This approach is simply an internet banking site made smaller for the mobile devices.
"Members know when the app is not a native app, as the user experience suffers," said Gaynor.
CUs On The Right Side Of Mobile
In 2012, Greater Texas Federal Credit Union launched its mobile app, which was created in partnership with Malauzai. The impetus was the "mobile movement" of the time and demand from the membership, explained Brandy Conway, vice president of marketing at the Austin, Texas-based institution.
Serving 69,036 members with $574 million in assets, Greater Texas Federal CU has 19,235 active online users and 8,780 mobile users. There are 3,577 Android users and 4,869 Apple users. To date, 441 members have signed up for Android Pay, 1,581 for Apple Pay and 437 Samsung Pay users.
Conway explained that the mobile offerings have changed over the years. This was due, in part, to member wants and market needs. The mobile app, she added, is updated, on average, each year.
"We initially didn't offer mobile check deposit or member-to-member payments," said Conway. "We also have set up an API so that members can locate shared-branch locations. We also now offer loan applications within the mobile app."
Some of the credit union's most popular features on the app include the ability to check account balances and view cleared checks, along with money transfers, member-to-member payments, check deposit and more. Users can also locate branches and ATMs, contact the credit union, connect with GTFCU via Facebook and more.
"Members have various ways to provide their feedback on our products and services and services they would like to see," said Conway. "One of those currently is offering bill pay through the mobile app. We are working towards offering this as a new feature."
The Digital-First Generation
All credit unions must keep pace with membership needs and banking trends. Mobile was once considered a trend but millennials have changed that playing field, making it a must-have. Often referred to as the "connected generation" or "digital first," banking forecasts for the coming years are based on millennials' buoying model.
The Independent Community Bankers of America (ICBA) conducted a report entitled "The American Millennials and Banking – A Cross-Generational Study (2014)," which revealed 74% of millennials feel mobile banking is "very important" to them, versus just 42% of baby boomers. The report also found 24% of millennials carry less than $5 cash per day.
According to a recent study from Salesforce Research, 27% of millennials are completely reliant on their mobile banking app, and that demographic is twice as likely as baby boomers to use mobile functionality for regular banking activities. Additionally, 28% of millennials prefer to receive alerts from their FI via push notifications to a mobile app, and when contacting their bank or credit union via social media, 69% expect to receive a response within an hour.
These findings support a growing movement to a smartphone-based banking culture that relies less on cash, human interaction and traditional banking practices. To this end, new developments and partnerships are taking place in the financial service industry.
In mid-July, Digital Insight, an NCR company, and PSCU, a credit union service organization, announced a new credit card management solution that allows members to access respective credit card accounts and checking and savings accounts in online and mobile banking applications. While an inherent enhanced security measure, this move also speaks to a mobile-first movement.
Under the new partnership, the Washington D.C.-based $1.6 billion State Department Federal Credit Union participated in a pilot program.
"Our members can now control when their cards can be used by turning them off and on, ultimately reducing fraudulent transactions over time," said Angel Baltimore, director of e-strategy and innovation at State Department FCU. "If by chance a card is compromised they can also report the card lost or stolen with the tap of a button."
New Mobile Goes Face-To-Face
Similar to social media, real-time interface via mobile applications is being bandied about as the next wave in banking. Facebook's recent "go live" function is an indication that consumers are looking for this real-time immediacy. And like most technologies, consumers lead and financial institutions follow.
The Sandy, Utah-based Financial Town made history on July 18 when it facilitated what it claims is the first overseas mobile-banking video call at the 2016 World Credit Union Conference in Belfast, Northern Ireland.
"Financial institutions are required not only to present transactional information but also how they choose to serve the member," Financial Town Founder and CEO Gene Pranger told CU Journal from Belfast. "Mobile will become the preferred delivery channel for the millennial generation and, for the foreseeable future, continuing generations as well."
The Next Wave
Pranger explained that Financial Town's BankOn app or web portal offers members e-signing and document sharing all within a video chat initiated from their own mobile device, regardless of time or location.
"Mobile video banking is the next wave of mobile. Credit union members will be able to speak face-to-face with mortgage and investment representatives, loan officers and insurance agents on their own terms, 24 hours a day, seven days a week," said Pranger who added that two credit union clients are currently participating in a pilot program. "Future growth among this industry will depend on the extent by which financial institutions are willing to put in the infrastructure to support the personalization of their mobile platforms."
Pranger, who was among video banking among pioneers with his 2008 uGenius platform, said all mobile applications have to be intrinsically useful for members, which includes an intuitive design.
"If a credit union's mobile app is not featured on its first or second screen interaction with customers, then this tool is likely not being used or seen frequently," said Pranger. "The more personalized and useful the app, the more meaningful the tool will be for the member, resulting in more product opportunities for the financial institution."
