As credit unions grapple with how to allocate precious financial resources, technology is claiming a bigger share of that pie. Nearly two-thirds of the 102 credit unions participating in Callahan & Associates’ annual Technology Priorities Survey plan to invest more money in technology in 2013, with roughly one in four respondents expecting to boost their spending by 10% or more this year. Although survey participants included just 4% of credit unions, they represented a broad slice of the industry, with assets ranging between $5 million and $5 billion for an average size of about $440 million.
The survey makes clear that credit unions are increasingly conscious of the role technology plays in their business strategy. Remote banking especially offers credit unions a way to be everywhere their members are. At the same time, technology is providing credit unions with new ways to cut costs and shift resources to services members want. Besides influencing budgets in 2013, these three strategies are helping credit unions get the biggest bang out of their technology bucks.
1. Early Birds Have the Advantage
When it comes to adopting new technology, most credit unions were of the same mindset: Don’t delay. Mazuma Credit Union ($239M, Kansas City, MO) is a case in point. The credit union invests not only in back-office improvements like core data warehousing and workflow automation but also in cutting-edge member services such as voice over IP for its contact centers, mobile payments, and iPad technology. By adopting these technologies sooner than originally planned, Mazuma hopes to reap the rewards of attracting “a younger, more tech-savvy membership,” says chief information officer Gordon Gregory.
But early isn’t necessarily the same thing as being first. Some credit unions are equally wary of becoming guinea pigs in a grand experiment. As one credit union recently noted in a CreditUnions.com blog: “Not being on the leading edge of technology can be beneficial, too,” if only to take advantage of someone else’s beta testing of products, services, and technological upgrades.
2. What the Membership Wants, It Gets
Credit unions are willing to adopt new technology if the benefits are evident, but how do they determine which options are worth investing in? Simple—they listen to the membership. Nearly 75% of the credit unions surveyed selected technologies that their members asked for, with mobile banking topping the list. In particular, 51% of survey participants plan to upgrade or add a mobile banking Android or iPhone smartphone app, 47% are considering a texting mobile solution, and 36% will either upgrade or add a dedicated mobile website. Anheuser-Busch Employees’ Credit Union ($2.4B, St. Louis, MO), for example, is adding new phone-based capabilities for person-to-person payments, prepaid debits, and remote deposits.
In fact as consumers turn to a bevy of electronic devices such as smartphones, laptops, or iPads for online banking, many credit unions are making mobile or person-to-person payments a priority. Veridian Credit Union ($2.2B; Waterloo, IA) allows its members to send or receive funds online quickly and efficiently through a system that also links through Facebook and LinkedIn. To date, Veridian has about 400 enrollees who send funds twice a month on average this way. “All the member needs is an email address or a mobile phone number to initiate a transaction,” says Renee Christoffer, the credit union’s senior vice president of administration.
3. Branches Aren’t the Only Way to Deliver Service
Along with the virtual presence that remote banking provides, automation and self-service features are prompting some credit unions to rethink their strategy for branches, particularly if minimizing those locations will benefit the membership with lower costs or new services. For example, AmeriCU ($1.1B, Rome, NY) introduced kiosks offering a full range of services, including loans, in 2008. Last year, AmeriCU’s kiosks accounted for 350,000 automated transactions, 38% of them conducted after hours. Although the survey found that most credit unions are still intent on adding traditional ATMs rather than kiosks, AmeriCU may be on the leading edge of a trend. Thanks to its kiosks, the credit union has been able to shorten its weekday hours to pay for expanded hours on weekends. “ We want to be open on Saturdays and Sundays so that members can come in and talk about college financing or financial literacy,” says chief operating officer Joe Anderson.
PSECU ($3.9B, Harrisburg, PA) has adopted an even more radical approach. The 391,000-plus-members institution has only two branches in the community it serves, preferring to rely on self-service features that encourage members to conduct their financial business remotely. “If you walked into our branch and said you were here for a mortgage, we’d guide you to the PC in the corner,” says Greg Smith, CEO of PSECU. “We’re helping our members understand they really can take care of everything from home.” That strategy may seem harsh, but as Smith points out, branches cost money that members end up paying for. If we adopted a normal branch strategy, our cost structure would be the same as every other institution and would require us to charge higher rates and fees, he says. “Instead, we’re using technology and our ability to work from a central location to offer something better.”
The full survey results are included in the 3Q 2012 edition of Technology@CU, available in print, online and in the Callahan Media App for subscribers.