Shoppers in American have taken their business from their mall to their mobile phone. According to Forrester Research Inc., online transactions, including those conducted via mobile, will comprise 9% of total retail sales by 2016. During that year, Forrester forecasts consumers will spend $327 billion online. Despite the conveniences of today’s fast-paced digital world, online purchases still require shoppers to complete cumbersome billing and shipping questionnaires for even the smallest purchases. It might seem like a minor task, but filling in all the fields is enough to deter many would-be consumers from making a purchase.
“The drop rate is unbelievable, especially on a mobile phone,” says Brian McVeigh, senior vice president at Lake Trust Credit Union ($1.6B, Lansing, MI).
Mobile wallet services address the transaction friction that is holding back shoppers by expediting the checkout process to a simple tap of the finger or click of the mouse. Lake Trust Credit Union is stepping into the mobile wallet game with MasterPass by MasterCard, an online program that requires users to submit only a username and password to make a purchase.
Lake Trust is the first credit union to offer the program and is working with PSCU to offer MasterPass as an introduction to mobile wallet technology. The service is currently limited to select merchants, but even if Lake Trust’s 158,475 members use it to make only a few purchases, that is enough to familiarize them with the technology. And being first to market positions the credit union at the forefront of mobile wallet offerings in the credit union movement.
To use MasterPass, a member must create an account with MasterCard on a secured site. Members submit their billing and shipping information and MasterCard sends them a username and password to access MasterPass. If a member wants to make a purchase on the website of a participating merchant, then they enter their username and password. Billing and shipping information automatically populates, which makes for a rapid, simple online purchase.
“It’s about creating convenience for the member,” McVeigh says. “We’re letting our members know this is a space Lake Trust is going to be a leader in, and it’s going to open doors for further roll-out of a mobile wallet.”
Given the limited number of merchants participating in the MasterPass program, adoption among Lake Trust membership is tepid. But the credit union is not deterred.
“It’s about getting the excitement up with your members,” McVeigh says. “Now that there are some of us out there on the cutting edge, the mechanics are out there, members will be much quicker to adopt. They need to see it and hear it from us first.”
Judging from its average member relationship — which takes into account shares and loans, excluding business loans — the credit union knows a thing or two about building member excitement and encouraging adoption. As of first quarter 2013, Lake Trust’s average member relationship, $15,720, was double its asset-based peer group’s $7,870. And it was more than double that of credit unions in Michigan, $5,280, or credit unions nationally, $6,337.
How Do You Compare?
Check out Lake Trust's Search & Analyze Scorecard to see how your performance measures up.
Any number of vendors can — and are — rising to the opportunity presented by mobile wallet. If consumers want it, someone will offer it. From Lake Trust’s viewpoint, it is important to adopt early and communicate often the benefit of the credit union’s products and services to members. When a member associates the credit union with a game-changing service like mobile wallet, they are more likely to bank — via mobile, online, or in-branch — with the credit union instead of elsewhere. And any credit union needs active, loyal members who use the credit union as their primary financial institution.
Lake Trust’s share draft penetration in first quarter 2013, 58.14%, was slightly higher than its asset-based peer group’s 57.69%, as well as that of credit unions in Michigan, 53.80%, and the industry, 51.73%. This is notable because having a share draft account is a sign that a member uses the credit union as their PFI.
McVeigh says it is important staff members are familiar with any new program so they are enthusiastic in their recommendations to members. So encourage staff to use new services when they launch, and you’ll be one step closer to widespread adoption.