How To Keep Pace In A Changing Payments Space

Navy Federal offers the newest solutions in mobile wallets and shares how smaller credit unions can, too.

 
 

The launch of Apple Pay late last year brought mobile payment technologies to the forefront for credit unions and banks as well as mobile wallet competitors. Google just released Android Pay, and Samsung Wallet is also nearing launch.

Yet, according to a Harris Poll conducted in early 2015, 43% of U.S. adults doubt smartphones will replace cash for the majority of payment transactions, and another 13% don’t see the transition fully occurring within the next 10 years.

Infographic: Will Smartphones Replace Cash & Credit Cards? | Statista
You will find more statistics at Statista

CU QUICK FACTS

NAVY FEDERAL CREDIT UNION
Data as of 06.30.15
  • HQ: Merrifield, VA
  • ASSETS: $69.9 BILLION
  • MEMBERS: 5,692,222
  • 12-MO SHARE GROWTH: 10.58%
  • 12-MO LOAN GROWTH: 18.12%
  • ROA: 1.31%

With a young, active, and technologically astute membership base, Navy Federal Credit Union ($69.9 billion, Merrifield, VA) already offers Apple Pay and PayPal and is the first credit union to offer Android Pay as well.

“When we look at these wallet offerings, we are really focused on the value that will be delivered to our members,” says Meghan Gound, assistant vice president of digital communications at Navy Federal. “We’re looking for things that make their lives easier.”

A Young And Mobile Membership

“Our members are in the military, they’re younger, they move around a lot, and they tend to be technologically focused,” Gound says. “So we develop specific services for them, such as our online banking and mobile banking platforms.”

Navy Federal has posted remarkable growth in its mobile channel in recent years. Its unique mobile app users increased by 36% year-over-year, and members have made 5.1 million scan and mobile deposits as of midyear 2015.

We start with the fundamental of: Is the technology going to be secure for our members? Next, we look at whether our members will be interested in the technology. 

The average mobile app user at the cooperative logs in 21 times per month, and members completed more than 39 million mobile app sessions in August, an increase of 52% over the same time period in 2014.

“These new offerings resonate with the millennial group,” Gound says. “For instance, 60% of our members who have adopted Apple Pay are between the ages of 18 to 34. That’s where we see these new technologies resonating and that’s where we are focused.”

Intense Competition For Wallet Share

Gound recognizes there is heavy competition for a share of its members’ wallets and trust. That’s why Navy Federal offers products and services that engage its members.

“We want to ensure we are delivering solutions our members expect,” Gound says. “There’s a lot of fragmentation in this space, but we believe if we are meeting the needs of our members — that if we are providing them with those great products and services — then we can do things better for our members than anyone else can.”

One example of this is person-to-person (P2P) payments. Navy Federal recognized that a large portion of its membership needed the ability to send money to and from family members quickly, securely, and conveniently. After exploring third-party P2P providers, the credit union decided to build its own platform in-house, allowing members to instantly exchange funds with one another.

Navy Federal also offers a third-party platform through PopMoney that allows members to send money outside the credit union to non-members. “Our primary focus is on meeting member needs and less about our competition,” Gound says.

A “Pretty Simple” Approach

When deciding on which solutions to offer its membership, Navy Federal takes a straightforward approach.

“We start with the fundamental of: Is the technology going to be secure for our members?” Gound says. “Our members place a lot of trust in us, so we want to make sure security is there. Next, we look at whether our members will be interested in the technology.”

“What we like about both of these offerings — Apple Pay and Android Pay — is they combine security with something that makes our members’ lives easier,” Gound says. “With tokenized payments, the member’s card number is not going to the merchant; it’s not stored on file and not held on the device. It is secure and easy to use.”

And when if comes to whether members would be interested in Android Pay, the data was clear. Fully 90% of Navy Federal’s members who use the Android app are on the “KitKat” operating system, indicating they are technologically savvy and desiring of the latest functionality.

Another example of Navy Federal’s approach toward innovation is the development of its mobile banking app. Credit union staff recognized how tricky it can be for a user to enter a password on a mobile device with a glass screen, so it found a solution that not only allows members to log in with either a four-digit pin or thumbprint (when using Apple devices) but also offers extra security features.

“Those types of solutions are great for our members,” Gound says.

How Small Credit Unions Can Deliver On The Mobile Promise

At nearly $70 billion in assets, Navy Federal is by far the largest credit union in the country, with resources and capital rivaling that of large banks. Yet, according to Gound, much of the credit union’s success in payments and mobile technology is transferable to smaller cooperatives.

“One of the best things to do is to look for the right partners,” Gound advises. “At Navy Federal, we built our solutions in-house because we have resources. A few years ago, we completely overhauled our approach to mobile, and we set up a user experience group — people who are focused on delivering a great solution for our members. We did that all home-grown.”

Navy Federal puts a premium on listening to its members, and it actively seeks feedback through various methods such as regular surveys on its social media channels.

“We take that information, and we build solutions for them,” Gound says. “But even smaller credit unions can find good technology and user experience partners and deliver something unique to their members.”

 

 

 

Sept. 14, 2015


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