We’ve arrived at the point where the convergence of mobile and security gives credit unions perhaps unprecedented opportunity to leverage the trusted relationship they have with members.
That was my conclusion after three days at Money 20/20. Why? Because the mantra was “engage the consumer, reward the consumer, build loyalty with the consumer, and protect the consumer.”
That’s what credit unions are supposed to be doing. And I didn’t see anything techie at the Las Vegas show that credit unions couldn’t deploy if they wanted, including myriad loyalty apps and several know-your-customer plays. (With the notable exception of virtual currency platforms.)
It also is apparent that boundaries are dissolving between telecom, high tech, and financial services providers, producing unprecedented collaboration at the same time as bitter competition (Wal-Mart and the Merchant Customer Exchange vs. Apple Pay and the major card brands, for instance.)
As conference attendee Belinda Caillouet, chief operations and information officer at Spokane Teachers Credit Union ($2B, Spokane, WA), observes, “It's interesting to hear that the big guys — BofA, Citi Bank, Facebook, Microsoft, Living Social, Visa — are talking about collaboration and the importance of working together. We'll see if that really plays out.”
There were some other potential myth-busters, too: Cash is still king to a great extent, and millennials don’t avoid branches as much as you might think.
Stats also were flying, and predictions were made. Here are two from Matthew Friend, managing director at Accenture Payment Services, looking forward to the year 2020.
54% of Americans will still be using cash at least weekly
18% will be using digital currencies on a weekly basis.
“The expected digital currency use we learned from our surveys blew us away. We’re not sure how we’re all going to deal with that,” Friend told his audience dominated by payments specialists big and small, financial institution executives, and venture capitalists looking to invest in the next big thing.
How bitcoin and other virtual currencies would work in today’s payment systems, much less at mainstream banks and credit unions, remains to be seen. But if they are to succeed, the process can’t be complicated for impatient consumers.
Keep It Easy, Make It Fast
That’s because, driven by millennials, the payment process needs to be easy and it needs to be fast, if it’s to succeed. That’s why the assumption seemed widespread at Money 20/20 that Apple Pay has the early lead on MCX’s CurrentC. “You only have to hold your iPhone phone up to the POS terminal for it to work,” one 20-something payments pro told me. “How easy is that?”
And there’s the rub. “Consumer demand for simplicity and convenience, and the technological advances, are really driving the innovation in payments,” says STCU’s Caillouet, who’s also chair of the CUNA Technology Council. “It's also good to hear that there is less focus on the bad guys getting into our systems and more focus on making sure that the data is useless to them when they do get in.”
That point was made in several sessions, with speakers pointing to techniques like tokenization and host card emulation that will be used to secure mobile payments. That’s helping drive Apple Pay and Visa’s own DSP tokenization and point-to-point encryption solution.
“Disruptors” was another term heavily bandied about at Money 20/20. It means products and services that changes established processes, but it also could apply to people. Especially millennials.
Know Your Millennial
“Know your customer” was bandied about a good bit at Money 20/20, mostly wrapped in a mobile context. But there was life before mobile and there’s life with it. That was brought home in a Tuesday session on retail banking that included heavyweights such as PSCU CEO Mike Kelly; Steve Rathgaber, the head man at Cardtronics, the world’s largest non-bank ATM operator and owner of the Allpoint network; and Doug Brown, senior vice president and general manager of mobile at FIS.
Much of that conversation came back to millennials. Kelly acknowledges that financial institutions need to serve millennials where they are and when they want to, but he says that takes what he calls a portfolio of touch points, including Internet, mobile, prepaid and ATMs. The portfolio approach, he says, means treating the collection of services as a brand, not as individual touch points.
He also gave a shout out to the branch. “Millennials still go there, too, especially at those moments of truth,” Kelly says, such as buying a house. And credit unions that go mobile go there with the ability to leverage “fantastic trust and social currency” across all channels, he says.
Brown at FIS, meanwhile, told the big room that mobile is where it’s at. “The whole mobile social cloud is driving massive behavioral change,” he says. “And millennials are going first, leading everybody else.”
Rathgaber, meanwhile, was asked what he’s learned from 30 years of ATM network experience. “That good habits die hard,” he says. “ATMs provide value and service, and people in the United States withdraw cash from them 10 billion times a year. It’s not rocket science. It’s basic stuff that works.”
The Big Poynt
Perhaps the biggest buzz at Money 20/20 was around the new point-of-sale terminal rolled out by Poynt, a startup launched by deposed Google Wallet chief Osama Bedier. The payment terminal is ubiquitous, supporting mag stripe, EMV, NFC, QR codes, and beacon technologies.
It also looks very slick, and Vantiv, a major player in credit union card processing, and Chase Paymentech says they’ll be distributing it among the more than 800,000 U.S. merchant locations they serve.
Senior managers with one big credit union at the show told me they’ll be looking at Poynt devices themselves, possibly to handle cash advances in their branches.
We’ll look to do a case study on that at www.creditunions.comif it proves to be a success.
Check out the rest of our coverage from Money 20/20:
· Money 20/20 Buzz Speaks To Opportunity For Credit Unions
· Apple Pay, Millennials Channel Day Two At Money 20/20