Smaller Credit Unions Initiate Online Banking Services

In the past, online banking was the exclusive domain of large financial institutions. The costs associated with the development and installation of this emerging technology at first limited the scope and penetration to a handful of credit unions that could afford to make large investments in unproven technology. Rapid adoption of Internet access by the average consumer and year-end 2002 data indicates that this is no longer the case.

 
 

In the past, online banking was the exclusive domain of large financial institutions. The costs associated with the development and installation of this emerging technology at first limited the scope and penetration to a handful of credit unions that could afford to make large investments in unproven technology. Rapid adoption of Internet access by the average consumer and year-end 2002 data indicates that this is no longer the case.

From June 2002 to December 2002, 331 credit unions initiated new online banking services. Credit unions over $25 million in assets who added Internet home banking to their services had an average of $101 million in assets. Of these 331 credit unions, over 100 were under $50 million in asset size. Compare this to the average asset size for credit unions over $25 million--$175 million--and it seems clear that the perceived importance of Internet account servers as well as lower costs associated with online banking today have resulted in a more level playing field, allowing smaller credit unions to provide this convenient technology to their members.

Online banking allows credit unions to not only offer more services and serve more members, but can also keep costs low. The computer facilities needed to accommodate online banking are less expensive than building and maintaining brick-and-mortar branches with employees. And unlike branches that maintain business hours, online banking provides members with 24-hour access to their accounts. Finally, the convenience associated with online banking encourages members to remain active in their credit union even if they move or live in an area not served by the credit union.

Internet home banking has become a central service for many credit unions. It is one type of technological advancement that has profited both credit unions and their members while staying true to the industry's dictum of providing more services at lower costs. More information on the adoption rates of online banking and the future and impact of different technology on member relationships is available in Callahan's upcoming 2003 Technology Survey.

 

 

 

May 12, 2003


Comments

 
 
 
  • Would be more meaningful to know the types of services are being offered on-line for different sized institutions and how the internet is being integrated with core systems.
    Anonymous
     
     
     
  • Callahan & Associates must be an amazing to have an employee like Angie Carr.
    Anonymous
     
     
     
  • Angie Carr has written an excellent, clear, and concise article that covers an important topic that concerns most of us today and more of us in the future!
    Anonymous
     
     
     
  • Very well done. I do all my banking online and am glad to see the credit unions getting in on the action. Online services is a major determining factor in choosing a bank for many people.
    Anonymous
     
     
     
  • what do these credit unions budget for intrusion testing?
    Anonymous
     
     
     
  • What is the name of the newest credit union in the industry?
    Anonymous