Apple Pay and its various mobile payment competitors are not the only technologies credit unions need to worry about.
A handful of other trends are playing out in the payments arena, according to Tom Davis, CSCU’s senior vice president of finance and technology.
These emerging trends include:
• Wearables. “The wearable craze is coming,” Davis said. While consumers demonstrate skepticism about products such as Apple and Samsung’s Internet-connected watches, “nobody is giving up.” And these products are being designed with payment credentials.
• P2P. Person-to-person payments will become table stakes. “You’ve got to do it,” he said, because millennials will consider nontraditional financial institutions if you don’t provide instantaneous ways to transfer money.
• Smarter Bluetooth. Right now, Bluetooth—a wireless technology standard—sucks a lot of battery life out of devices, preventing heavy usage. However, smarter, more efficient Bluetooth standards will allow for increased use of beacons, which detect members’ smartphones.
Beacons will allow credit unions to have instant access to background information about their members when they walk in the branch.
• Data mining. Look for nontraditional businesses to enter the payments space—not for the interchange revenue, but for the massive amount of data that member payments generate.
“Data is their gold mine,” Davis said. To stay current in the marketplace, credit unions must explore how to leverage their members’ data.
• Virtual currency. Virtual currencies such as Bitcoin have experienced problems in recent years, but they're thriving in some microeconomies. Popular with gamblers in Las Vegas and people sending money internationally, virtual currencies are fast, frictionless, and unregulated.
Credit unions should keep an eye on any regulatory actions that bring them into the mainstream.
Smartphone banks. Banks that exist via cloud will grow in popularity. Because they have no branch costs, they’ll provide consumers with free and low-cost services that financial institutions with physical locations can’t.
Pay attention to innovations in this space. “These people will teach us something,” Davis said.
Paying attention to these trends and the overall future of payments is critical for the survival of credit unions, Davis said.