Big banks, fintechs setting the pace with mobile banking
Credit unions will have to become better students of the marketplace if they hope to capture consumers’ business.
That was the message from Dave DeFazio, partner with StrategyCorps, who during a Thursday breakout session on mobile banking noted that fintech companies are “changing the way people do business,” DeFazio said, and Amazon Prime has changed shopping by going outside boundaries.
“We are in the digital-assistant era. People interact with their devices in a different way from five years ago,” he said, including using voice texting instead of typing, talking to Siri on some Apple devices, and Amazon Echo. “Companies are making apps easier and more intuitive. You can order coffee in advance by talking, and then pick it up at Starbucks.”
Industry estimates say 24.5 million voice-first devices will be shipped in 2017. DeFazio said sooner rather than later will come the birth of a hands-free banking era. One example: Bank of America is preparing to launch voice banking on its mobile banking app later this year. The service will be known as “Erica.”
“Big banks are setting new expectations, so credit unions will have to figure out how to get those capabilities into their mobile banking,” he advised.
And, he said, the battle for top-of-wallet status is about to get tougher.
“One of those things credit unions have always been able to count on is the member reaching into his wallet at the point of payment and seeing the credit union logo on his debit card. But with many apps – including Starbucks, Uber and Amazon Prime – there is no need to pull out a card.”
The next wave might be automated advice apps. Current examples include Acorns, Simple, Dave, Penny and Digit. DeFazio noted big banks and “Shark Tank” entrepreneur Mark Cuban are investing in or buying these companies. Acorns lets users send small amounts of money to an investment fund without thinking about it
One hundred percent of financial institutions need fee income, but the problem is zero percent of customers/members want to pay. DeFazio said this is seen with checking accounts – people want them to be free and get angry if they are not. On the other hand, Netflix has 100 million paying customers, which he said indicates people are willing to pay if they see perceived value. He noted Capital One is offering 50 percent off Spotify Premium subscriptions to those who use their Capital One card to pay. Georgia’s Own Credit Union in Atlanta created a checking account that offers cell phone protection, roadside assistance and other benefits for a fee of $5.95 per month, and the CU has been successful with it.
“There are interesting new things happening because of how and where people are spending their money,” he assessed.