WASHINGTON (9/11/14)--As mobile technologies evolve and become a way for underserved populations to access financial services, the Credit Union National Association has written to the Consumer Financial Protection Bureau (CFPB) to urge continued coordination with payments regulators. The letter acknowledges that such services can help with member access to financial services, but also notes implementation costs and regulatory burdens that currently exist.
"The CFPB should minimize regulatory burdens associated with offering mobile financial services, to ensure that credit unions and other providers are able continue to provide these innovative services to consumers," reads the letter, signed by CUNA Assistant General Counsel Dennis Tsang. "The agency should also recognize that implementation costs to provide mobile services can be quite significant for credit unions and other smaller financial institutions."
A Federal Deposit Insurance Corp. white paper from April estimated that, of the underbanked and unbanked households, almost 90% had a mobile phone and 71% had a smartphone. CUNA believes that these populations could gain enhanced access to credit union services through these devices and phones.
|Source: Credit Union Magazine|
Mobile financial services offered by credit unions can include a mobile website or downloadable app and the use of text messaging to check balances, account history and transfer funds.
CUNA's 2014 Technology Spending Survey showed, that of the 200 credit unions that responded to the survey, nearly 60% offer mobile financial services and another 28% percent said they plan to do so within the next two years.
According to a Credit Union Magazine article on the survey results, "virtually all credit unions with no plans to offer mobile banking have less than $50 million in assets. Conversely, 100% of credit unions with more than $500 million in assets offer mobile banking."
CUNA believes there are "significant" implementation costs to offer credit union members access to mobile financial services, which includes integrating with existing symptoms, securing access channels and fees for software licensing.
"While mobile financial services provide greater convenience for consumer members, they generally do not provide substantial cost savings for credit unions at the present time," Tsang wrote. "As consumers continue to make greater use of mobile financial services, there is potential for cost savings on a per-transaction basis over time."
Mobile financial services also come with security risks, and CUNA has urged the CFPB to continue its research into issues such as data security, managing fraud, providing effective authentication methods and physical security on a member's mobile device.
Use the resource links below to access CUNA's letter, and the Credit Union Magazine article.