Mobile adoption by consumers marches forward, but at a pace slowed by the overall complexity and variety of approaches to mobile. Security concerns, as well as terminal conversion issues with merchants, also contribute to the drag on widespread adoption. For now, traditional card-based payments remain the easiest and most efficient way to pay at the point of sale. But that should not lull credit unions into a sense of complacency, as climate change can happen quite rapidly in the payments ecosystem.
The competitive environment for credit unions now includes new and disruptive innovators. A whole new segment of players has emerged seeking to capture consumer interest with mobile solutions that add value to the payments experience. This means credit unions will need to add mobility to the fuel that powers their growth engines.
A host of mobile financial services (MFS) providers – including Google, MasterCard, Visa, Apple, American Express, and PayPal – have aggressively entered the mobile payments space. They are gathering vast amounts of data while developing mobile tools, thus gaining ground and threatening to take over roles long played by financial institutions. These companies threaten to disrupt the profitable payments relationships credit unions presently enjoy with their current and future members.
The good news is that over three million consumers joined credit unions in 2012. And according to the NCUA, in the first quarter of 2013 alone, over 800,000 people discovered the credit union difference by becoming members. A large segment of these newly minted members expect to conduct their personal financial business on the go and around the clock from their ever-present mobile devices.
To leverage mobility as a game changer and relationship builder, as well as maintain a firm grip on key elements in the payments chain, credit unions should consider a two-step strategic approach:
1. Understand The Mobile Imperative – Get In The Game
The typical credit union’s legacy suite of core services – including deposit accounts, payment cards, loans, and investment instruments – reached maturity years ago. But the fundamentals of banking are changing, sparked by the rise of mobile solutions and fueled with the emergence of services such as micro loans, prepaid accounts, and third-party PFM providers. A generation that has been informed and influenced by a steady stream of technology innovation will require more. A sound start is to create alliances with recognized front-runners in the MFS space – Google Wallet, Visa’s V.Me and MasterCard’s MasterPass. Getting these organizations’ mobile and digital innovations branded for credit unions and in the hands of members can build relevance and create gateways to new transactional experiences.
2. Go Beyond The Transaction With Value-Added Services
Members are increasingly demanding more functionality, utility, and value from their mobile-based experiences.
These individuals are thinking:
Why carry a card when I have a phone?
Wouldn’t the ultimate convenience be to have one device with unlimited capabilities?
Shouldn’t I be able to manage my finances on my device? Or aggregate payments from different places in a single transaction?
Couldn’t my phone track my financial profile with different retailers or vendors, recall my last transaction, or keep a log of my preferences?
Now that merchants have my information, can they send me targeted texts or offers that might be of interest to me?
The ability to segment and analyze data is a digital key to unlock what members really want and expect from the credit union The more credit unions know their members’ financial posture and transactional behaviors, the better positioned they’ll be to meet their needs.
Consider partnering with a CUSO that has the experience and horsepower in analytics to gather and interpret member data from disparate sources. This capability gives credit unions the insight required to make the right offer to the right member at the right time. By coupling the output of a powerful analytics engine with innovative mobile services from a trusted credit union family member, credit unions can create the added value that maintains member loyalty and enhances relevance.
Fredda McDonald leads the Credit Union Experience division of PSCU, which includes national sales, account management, marketing, and strategic portfolio consulting. Fredda has been instrumental in helping to lead a transformation of focus for the company under a strategy called MōPRO (Member Owner Payments Revenue Optimization). This strategy represents a tangible way that PSCU is helping credit unions outperform the market through innovation, engagement, and growth in payments.
PSCU offers payment programs, analytic insights and mobile solutions, including digital wallets, to help keep credit unions at the leading edge of the consumer movement to mobility. Our relationships with industry giants like Google, Visa, and MasterCard help credit unions gain secure entry and a long-term foothold in a market that will be critical to their continued growth and relevance. For more information about our game-changing payments solutions and strategies, please contact us at firstname.lastname@example.org or call 888-918-7351.
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