It’s 10 years now since the first iPhone was released — on June 29, 2007 — and while maybe few saw it coming, smartphones with spacious screens and good visuals have revolutionized banking.
“Roughly 70% of our online users are coming to us on a mobile device,” says Tanan Miles, vice president of electronic banking at $4.9 billion Ent Credit Union in Colorado Springs, CO.
Other credit unions say likewise. Mobile banking has swiftly become the dominant channel.
This you probably know. But, there are four things about credit unions and mobile banking you may not know, but should.
Custom Apps Are Winning Credit Unions And More Control Is Why
Roughly one in every two credit unions has a mobile banking app and maybe 98% of them are off-the-shelf apps developed by third-party vendors. One vendor in fact has about a 25% market share — one in four credit unions offers exactly the same app to their members.
But a growing number of financial institutions now have custom apps, just like about every money center bank. So too for about two to three dozen credit unions, almost all with assets above $1 billion. That number is growing.
Ask credit unions with a custom app why and their loud answer is more control over how the app feels and functions, and therefore over the member experience.
These credit unions have come to believe that they are their app, that for most members the primary touch point is the mobile app.
“The pro to an in-house, custom development is the flexibility that we have in building solutions, allowing us to offer services to our members based upon their needs and our business model,” said David Araujo, vice president, technology at Digital Federal Credit Union, an $8.0 billion institution in Marlborough, MA.
Many other credit unions say much the same. It’s all about control.
Cost Control Is Significant
Off-the-shelf mobile banking apps usually involve fees that revolve around the number of users and as those numbers have grown bigger, so have the monthly bills. That essentially ends when an app is custom developed and controlled by the credit union.
“We are getting what we need at lower cost,” said Kevin Randall, CIO at $1.2 billion USALLIANCE Financial Federal Credit Union in Rye, NY. “A fixed cost product, which is what our mobile banking essentially is, is not a drag on the business.”
As more members sign on to use mobile banking the costs do not significantly increase with a custom app, and for many credit unions that is a real plus.
You Must Keep Pace With Change
New features are a common occurrence in releases of custom apps, as the pace of innovation in mobile banking remains fast. What isn’t good enough for some institutions is waiting for new releases on a timetable that serves a third-party developer.
When asked why her institution had gone with its own custom app, Mary O’Rourke, executive vice president at $8.1 billion Randolph-Brooks Federal Credit Union in Live Oak, TX, said that the credit union wanted to be able to set the timetable as to when new features roll out. “We wanted to be able to do this on the fly,” said O’Rourke.
At $848.6 million Vantage Credit Union in Bridgeton, MO, which has its own custom app, chief member experience officer Kathy Palmer said, “We‘re in control of our own development roadmap. You can’t do that with off-the-shelf solutions.”
Know too: the pace of change very probably will get faster still. Much innovation is happening in mobile banking and that will continue.
Security Must Be Unimpeachable
Custom mobile banking apps can be as secure as off-the-shelf apps, maybe more so. That’s the word from the credit unions that have taken the custom app route.
Those institutions also acknowledge that their security tests are ongoing. What they do is routinely test their apps, and hire independent testers; and that data is made available to examiners.
At USALLIANCE, CIO Randall said, “We continuously assess the risks associated with the mobile app. We review assessments provided us by our vendors. And we perform annual security health assessments.” He emphasized that no significant issues have been detected to date.
Araujo at DCU said likewise: “We do a full internal audit of our mobile services, and we have an alert system that we use for monitoring. There have been no compromises.”
Want more information about credit unions and their custom mobile banking apps? Order your copy of the research report The Custom Way Forward in Mobile Banking recently published by EasCorp.