Technology is playing an increasingly important role in how credit unions serve their members. Besides bolstering their physical branch networks over the past year, credit unions also sought to expand the quantity and quality of their online and mobile delivery channels.
The recent proliferation of electronic options has not only reduced paper trails and slashed operating costs at many institutions but also freed members from a dependence on brick and mortar branches for their basic transactions and inquiries. As of 3Q 2012, 55% of all credit unions offer eStatements and roughly 47% offer online bill pay. For cooperatives with assets greater than $20 million, those figures are 84% and 78% respectively.
Roughly 6% of credit unions currently offer a remote deposit capture (RDC) solution that allows members to deposit their checks without visiting a branch. When categorized by asset size, 41% of credit unions over $500 million offer this service compared to just 16% of institutions between $100 million and $500 million. Only 2% of credit unions with assets less than $100 million offer remote deposit capture.
Keeping Up With The Joneses
Small and midsize credit unions have kept pace with their larger peers by eploying many electronic services, but options like mobile banking and remote deposit capture (RDC) remain key opportunities for further development.
SOURCE: THE 2013 CALLAHAN CREDIT UNION DIRECTORY
Besides serving current members, remote services are becoming increasingly important for attracting potential members. Online banking has already enabled a nationwide, 24-7 electronic footprint at many financial institutions, but the tasks these systems handle are growing even more complex. As of September 2012, 46% of credit unions with more than $20 million in assets are able to process new member applications online and nearly 68% can accept loan applications via the virtual channel.
One way institutions may want to expand these capabilities further is to add electronic signatures. As of 3Q 2012, just 8.5% of credit unions over $20 million in asset size offer this option.
The final piece in truly untethering members from branches is to let individuals access the full power of their financial institution wherever they go. In September 2010, just 17% of credit unions with more than $20 million in assets offered a mobile banking option. As of 3Q 2012, that number has grown to 45%.
Although the current environment shows a demonstrated effort by cooperatives to continue to enhance member value in remote channels, a look these institution’s plans for 2013 also shows a flurry of new activity on the horizon.
A Fresh Face For Mobile And Online
In the ninth annual Technology Spending Survey by Callahan & Associates, credit unions provided insight into their technology budgets and priorities for 2013. More than 100 credit unions, with assets totaling $45.3 billion, responded to the survey.
In addition to other questions, respondents were asked to provide insight regarding their budget and investment priorities for member-facing channels, as well as the specific options they intended to focus on this year.
According to their responses, the trend of exploring and upgrading mobile solutions, which has steadily gained momentum over the past few years, seems to be hitting full stride in 2013. When considered holistically, the introduction or upgrade of some form of mobile banking (including SMS, browser, or app) was the top project that respondents budgeted for this year.
A Website Done Right
Items related to the ease and efficiency of access make up the lion’s share of budgeted technology investments for 2013.
SOURCE: CALLAHAN & ASSOCIATES’ 2013 TECHNOLOGY PRIORITIES SURVEY
In terms of providing access via mobile, applications reigned supreme, with nearly 56% of respondents planning to add an app this year and 44% planning to improve upon an existing iPhone or Android app. However, a full 21% of respondents may also focus on making their banking website compatible with a mobile browser and 50% are planning to tweak their mobile browser pages.
Websites and Internet home banking modules are also top candidates for new investment or improvements this year. Roughly 65% of respondents plan to redesign their websites in 2013 and 71% have budgeted to improve their Internet home banking. Of those credit unions that have not implemented mobile solutions or home banking, many are likely to move forward with those priorities this year.
Remote deposit capture (RDC) is also gaining traction among cooperatives, with 64%of survey respondents planning to add a mobile option this year and 27% planning to upgrade an existing offering. Surprisingly, 42% of credit unions have also budgeted for the addition of a peer-to-peer (P2P) payment option that allows members to send and receive funds via virtual channels. This technology will likely play a much larger role in the future as members’ relationships with the credit union, their electronic devices, and each other continue to evolve.
What’s Driving Credit Union Innovation?
When asked to characterize their philosophy towards technology, the majority of credit unions identified themselves as early adopters or fast followers. Credit unions see themselves as pushing the industry forward to better leverage new technology and stay competitive with heavily branched bank competitors, but they are also wary of wasting member’s money on any unproven options.
When looking at decisions to launch or upgrade a technology, credit unions were asked to rank the importance of outside factors based on their influence, from most important to least important. The majority of respondents — a full 68% — indicated that when looking to add or improve virtual services, member needs trumped all other considerations, including what banks were doing.
What Influences Tech Investments?
At a majority of credit unions, members are at the reigns of the institution’s delivery channel developments.
SOURCE: CALLAHAN & ASSOCIATES’ 2013 TECHNOLOGY PRIORITIES SURVEY
According to 24% of credit unions, the second most important external influence is what other local cooperatives are doing. Right behind that, 21.4% of credit unions indicated they look to what larger credit unions are doing as their third most important consideration.
As virtual channels continue to become more sophisticated, they will eliminate many of the burdens associated with low-level transactions, allowing credit union employees to concentrate on more effective and profitable interactions in other channels.
Given the significant cost savings of online and mobile resources, many credit unions are also investing in their technology-related staff to ensure a continuation of high-quality experiences in these channels for many years to come. Only 1% of credit unions plan to decrease IT-related staff this year, while 22% plan to grow those departments. In last year’s survey, only 16% of credit unions had a dedicated chief technology officer. This year, 26% of respondents said they have a dedicated head of IT.
In all, an analysis of market data shows that in an increasingly digital world, credit unions are responding to the developing need for remote services. It’s clear that these strategic investments are not only a vehicle for reducing expenses, but also a critical investment in providing world-class service to each and every member — wherever in the world they might be.