The pace of technological innovation and change has accelerated rapidly during the past several years. And you shouldn’t expect that pace to slow down anytime soon.
From payments and smart machines to cloud computing and information security, these seven tech trends will soon influence how members conduct their financial lives and the choices you’ll make to deliver products and service to them.
A year ago credit unions and consumers faced unsettled questions about mobile payments, says Tom Davis, CSCU’s senior vice president of finance and technology. But then along came Apple Pay.
Apple brought payments to the front page by announcing Apple Pay, the electronic payments channel for its proprietary devices, writes CUNA Technology Council experts in the CUNA 2015-2016 Environmental Scan (E-Scan).
Apple Pay answered many of those unsettled questions and now the industry is aligning. Numerous competitors are making plans to ramp up or compete with Apple Pay this year, Davis says.
But mobile is only part of the payments story.
The shift to the EMV (Europay, MasterCard, and Visa) card standard will hit later this year, changing the way consumers pay at the point of sale.
Virtual currencies such as Bitcoin add another interesting dimension. Although these currencies have experienced problems catching on in recent years, they’re thriving in some micro-economies.
Popular with casino patrons 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, Davis says.
Additionally, person-to-person payments will soon become a required offering. Plan to offer this service, Davis says. Here’s why: Millennials—your future borrowers and savers—will turn to nontraditional financial institutions if you don’t provide instant ways to transfer money.
A growing selection of innovative gadgets and wearables—items such as “smartwatches” that incorporate technology into accessories—has flooded the financial realm. Wearables appeal to a wide range of consumers, including credit union members, the E-Scan says.
Just imagine visiting your local coffee shop wearing your favorite smartwatch and waving it over a terminal to issue payment. Done—no coffee and wallet juggling required.
Maybe you say “withdrawal—$40” while wearing Google Glass in close proximity to an ATM, and it dispenses your money. Or perhaps you look at a product and say, “Buy this,” which triggers an instantaneous payment and checkout.
“The wearable craze is coming,” Davis says. While some consumers still demonstrate skepticism about products such as Apple and Samsung’s Internet-connected watches, “nobody is giving up.”
Cloud services such as Apple iTunes, Netflix, Dropbox, Gmail, Pandora, and Spotify seem omnipresent. Millions of users take advantage of these services every day.
Cloud computing, or distributed computing, takes many forms. These include public or private cloud; infrastructure as a service (IaaS), or cloud-based infrastructure such as server, storage, and network services; and platform as a service (PaaS), which facilitates the development and management of Web applications, according to the E-Scan.
Most businesses, including credit unions, now use some sort of cloud computing, whether that means a third party runs core processing systems, online or mobile banking platforms, or perhaps credit or debit card processing.
The trend of financial institutions that exist only via cloud will grow in popularity. Because these institutions 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 and learn from them, Davis advises.
The rapid expansion of mobile computing, wearable devices, and tablet-based systems—combined with pervasive wireless networks—will rapidly increase the rate of data creation in structured and unstructured systems. This includes the data embedded systems generate, as well as financial institution-based transactions and social media/ public information systems.
Propelled by the “Internet of Things,” the ever-increasing volume of data will push credit unions to both expand and increase the use of invisible analytics, which manage, decipher, and react to consumer behavior trends and market changes.
SIDEBAR | Accommodating Tech Changes at Your CU
High-functioning systems will pave the way for smarter, faster, and more reliable decisions, and allow credit unions to deliver customized services and information transparently to individual consumers, according to the E-Scan.
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, according to Davis.
“Data is their gold mine,” Davis says. To better serve members’ current and future needs, credit unions must explore how to leverage members’ data.
Information security speed and agility
Unfortunately, you can expect the data breach trend to continue. So stay vigilant and look for new system vulnerabilities (including those stemming from older code) and increasingly sophisticated malware, the E-Scan notes.
In response, credit unions should strengthen their information security posture with increased agility and faster reaction times to emerging cyberthreats. This will require developing a deeper understanding of systems and practicing threat scenario responses.
Having this information will help you quickly assess and resolve security incidents—because the sooner you resolve an incident, the smaller the potential impact will be on members.
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