Apple Pay has made a terrific splash in the industry. Many millions of media impressions later, its launch has been noted as a success, although adoption and use are still to be seen. For the moment, the service, according to The Wall Street Journal, remains “hard to find.”
Despite the initial, relative dearth of penetration, the marketplace remains upbeat about the product. The key difference between Apple Pay and its competitors — such as Google Wallet and Softcard — is the powerhouse platform combination of iOS, iPhone, and soon, Apple Watch. These technologies provide a backbone to make the mobile payment offering work.
Predictions abound on what methods will dominate payments in the future. Apple Pay and NFC technologies have a solid start, but other methods, such as the pending, retailer-driven CurrentC may further crowd the marketplace in coming months.
It is crucial that credit unions take stock of these events, the solutions available to them from all providers they would trust with members’ data, and plan for the future.
Cards, Cores, And The New Horizon
For decades, cards have dominated in payments, and that ecosystem is evolving naturally into mobile. The same lessons credit unions — and all financial institutions — have learned from managing cards must be examined, updated, and applied to preparations for mobile payments implementation.
Cards work for the same reason everyone is excited about Apple Pay — the powerful structure that supports them. Many credit unions have built their branded card offerings directly into their core account processing systems — the backbone of credit unions’ technology structure. This provides consumers with seamless information and experiences across all channels, and flawless execution regardless of point of purchase.
At Fiserv, our mobile payments experts have found that branded, app-based mobile payments solutions with strong core systems integration fare significantly better with credit union members and bank customers. – Shirra Frost, director of Mobile Marketing for Digital Channels at Fiserv
Additionally, branded cards have become a powerful tool to link members to their credit union – and it would be a misstep to not carry credit union branding and the important consumer connection it provides into mobile payments.
Build Into the Core: The Key To Preparing, Implementing, Delivering
Building mobile payments, either directly or via existing online portals, into core account processing is a key step for credit unions entering this new space. Many are implementing these strategies. Fiserv recently found that 64% of credit union CEOs either have a mobile payments strategy or plan to be ready to adopt within 12 months.
Security is always top of mind for credit unions or any financial institution, and when it comes to mobile, credit unions expect the highest level of security. Core technology vendors that provide integrated mobile solutions for clients already have high security standards to protect client and member data. When considering non-core-based payments and other technology providers, and especially non-traditional providers, credit unions must have even more rigorous standards. Non-traditional providers may not have the same regulatory oversight, or maintain prudent levels of security.
While there is time to ramp up in mobile payments, consumer demand for effective solutions is mounting.
More importantly, mobile is a fast-paced transaction environment, and members will expect little or no lag time between their activities and account-side updates. Mobile payments are complex and comprise more than just purchases made at the point-of-sale. After all, there are four key pillars of mobile payment activity: self-payment, peer-payment, biller payment, and point-of-sale payment.
With so much to take into account, building into the core is essential to providing seamless back-end information flow for credit union staff. More importantly, it helps ensure branded, uniform front-end experiences for users.
This last point is crucial. At Fiserv, our mobile payments experts have found that branded, app-based mobile payments solutions with strong core systems integration fare significantly better with credit union members and bank customers. In fact, average mobile adoption is more than 50% higher, and average transaction totals per mobile registrant are almost twice as high for those with branded apps than those without. A smooth experience for clients is the absolute goal, and data shows that putting your brand front and center in mobile payments is of great benefit.
While there is time to ramp up in mobile payments, consumer demand for effective solutions is mounting. Credit unions – whose members value their relationship with their financial institution — are uniquely positioned to build creative, valuable, brand-centric mobile payments experiences for members.
By preparing now — and remembering and applying crucial lessons from past payments evolutions — credit unions may enjoy tremendous success and tap into a powerful, new growth engine in coming years.
Shirra Frost is the director of Mobile Marketing for Digital Channels at Fiserv. Frost is responsible for communicating our mobile banking and payments capabilities to our customers as well as driving thought leadership in the mobile space. You can reach her at firstname.lastname@example.org.
Fiserv (NASDAQ: FISV) is a leading global provider of information management and electronic commerce systems for the financial services industry, providing integrated technology and services that create value and results for our clients. Fiserv drives innovations that transform experiences for more than 14,500 clients worldwide. Visit us at www.fiserv.com.