This is an update of an original article which was published on 7/9/2007
Should credit unions plunge into the world of mobile banking now, or should we wait until the technology has a proven track record?
The growing wave of interest in mobile banking over the last year stems from a recognition that the cell phones, which increasingly resemble full-fledged computers, offer a gateway to new convenience in financial services. The iPhone has now sold millions of units since its debut last year and is perhaps the best example to date of a “converged” mobile device. These millions of users have already experienced how the added convenience of mobile internet access can fit within their daily professional and personal lives. Mobile personal finance is highly relevant to this medium. We know from research studies that internet home banking ranks among the top considered web destinations for consumers. This desire to access account information and conduct financial transactions will follow in the mobile device for all the same reasons.
If there is one thing to learn from internet banking which should be applicable to this situation, it could be that “timing is everything.” For this reason, credit unions should be looking at the financial institutions that have rolled out mobile banking platforms and asking “Why are they all so focused on this now?” Mobile payment technology, including person-to-person (P2P) and near-field-communications (NFC), clearly seem to offer the best potential ROI given new promised revenue streams. However, while the potential is enormous, it may still take several years before the widespread use of mobile payments via cell phones aid in point of sale transactions in a significant way.
It is unlikely the big banks, who all rushed to release their own mobile banking platforms last year, know what the mobile payments landscape will look like in another two or three years time. Usage data is being analyzed and trials are still being conducted. However, most recognize that 1) cell phones will almost certainly play an important role in future banking, and 2) a mobile platform with an already significant user audience will help position the financial institutions to be ready for future mobile payment services and other capabilities as they are conceived and deployed.
This is similar to more traditional web strategy; having a platform and audience in place makes it a lot easier to deploy an extension of that platform in the future. This was the credit union experience with first generation home banking and subsequent extensions: bill pay, loan processing, e-Statements, A2A, and more. This is not to say it is impossible to launch a stand alone mobile service later in the future when all the pieces are in place, but it will likely be more difficult than it will be for other institutions already entrenched in the mobile banking market.
The future of mobile banking will allow for an immediate way to validate a transaction, avoid a fee, or move money with minimal effort at the point of sale. Like it or not, it is coming. If you can believe that this device is how information will be accessed and transactions processed in the future, then it seems reasonable to suggest that the time is now for credit unions to begin engaging and learning with our interested members. In other words: First, build up the platform. Second, acquire experience along with members about mobile banking. Third, extend services into new mobile banking areas as they are available.
At the very minimum there are first mover learning opportunities that can be gained from hitting the ground running now. At best, we have an opportunity to completely redefine member value with technology once again, though the ultimate form of convenience. Just imagine: anytime, anywhere access to my credit union and funds in the palm of my hand.