“Yes, interesting stuff, but how connected is too connected? Do our members really need this level of access to their credit union accounts? And, don’t forget about security. This seems like a really expensive member acquisition or retention strategy.” -- Credit Union Executive, 1996!
Try, if you can, thinking back to the mid-1990 glory days of the early dot.com boom. If you were around the consumer financial services marketplace you will remember the heated debate about what kind of role the Internet would play in service strategy. You will also recall high skepticism about how to justify spending on this new and unproven technology without a clear ROI. After all, how many of our members actually used the “World Wide Web”? Besides, wasn’t the Internet just a playground for younger and more high-tech focused members anyway? And, how many ways beyond the branch and call center did the member really need to gain access to information? According to Callahan’s 1996 Technology Survey just two credit unions, Stanford FCU (Palo Alto, CA) and Community FCU (Dallas, TX), offered internet home banking in the early part of the year.
Fast-forward just over a decade and the notion that the Internet is not a primary service and communication channel is almost laughable. Does convenience matter to the member? You bet it does, and the proof is witnessed in the trends over the last ten years. However, with the benefit of hindsight it is perhaps too easy to discount the legitimate business questions that were being raised at the time. Of course ROI matters, of course member-value creation needs to be relevant to a significant group of members to be “worth it”, and of course there should be a compelling business case for the cooperative organization as well.
Today, mobile banking faces a similar debate and it is hard not to draw parallels. The added obstacle facing mobile banking deployment in 2007 is the déjà vu “been-there-tried-that” feeling that remains as a result of earlier mobile experiments that never quite took off, despite plenty of hype. This has been a sticking point in 2007 for many credit unions that spent a significant amount of money five or six years ago only to abandon their efforts due to low member adoption.
Still, credit union adopters currently tout increased convenience, technology differentiation, future member-retention, and new member relationships. Given the early adoption stage among only a handful of leading credit unions, mobile banking results to date are not likely to impress many skeptics. However, proponents argue that adoption is coming faster than we might expect given that over 200 million Americans now use mobile phones – the majority of which are mobile banking-capable. In addition, they contend, we may be looking in the wrong place for proof of concept. If trends from the last few years hold true, European and Asian markets likely give us an early glimpse into the future of mobile banking as consumers adopt the technology at much faster rates than in the U.S..
First-movers argue that given these trends, adoption is likely inevitable and the added convenience to the member will be the primary driver. Proponents maintain that in 2008, financial institutions which only offer PC-based home banking access could actually seem inconvenient by contrast to many members who already rely on daily mobile communications through devices such as the Blackberry, Treo, Apple iPhone, or other mobile devices.
The overriding business strategy with mobile is about being available to the member, wherever they are and whenever they might have a financial need. This includes creating a platform and user base to help the credit union learn and be ready for mobile services that do not currently exist but may be vital to future credit union member service. Perhaps it will be mobile payment technology to replace the debit and credit card (ie. the digital wallet), or person-to-person payments, or other financial service opportunities which haven’t yet been recognized that the ubiquitous cell phone will help to deliver.
As with home banking ten years ago, who would have thought online services would rapidly evolve to include bill pay, check images, e-statements, instant loan approval, check depositing, and more. For these reasons, planting the flag early in introducing these mobile services to members could be a very smart move for credit unions.
Want to know more? Check out this CreditUnions.com eUpdate which featured the three types of mobile banking technologies being deployed by credit union.
More? Register to join Callahan & Associates and credit union peers nationwide on June 21 st for a vital exploration of the mobile banking opportunity. The 90-minute web conference “ Is Mobile Phone Delivery the Next Breakthrough in Member Relationships? ”will feature the latest Callahan research and presentations from first-mover credit unions that have recently deployed mobile banking programs.