Moving to mobile
Rapid technology advances and consumers’ growing acceptance of mobile payments have set the stage for a paradigm shift in mobile financial services. Members will be conducting more routine financial transactions with mobile devices because this channel saves time and is more convenient.
To increase mobile banking’s sustainability and profitability, credit unions will have to invest in the four types of mobile payments, which involve paying:
About 16% of online households made mobile bill payments in 2013—up from about 8% the year before. Smartphone users lead the way, with mobile bill payments among this group jumping 150% from 2012 to 2013. And about 25% of consumers who own tablets use those devices to pay bills through financial institutions, according to Fiserv’s research.
For now, consumers prefer to make payments and send money to others using their financial institutions instead of a specialized third-party. But that might change as more nontraditional players enter the mobile payments arena, including big-box retailers, online payment services, and social media giants.As members move from information-based, mobile banking activities (checking balances) to transaction-based activities (making payments), credit unions need to leverage their existing advantages and assets to retain and strengthen their member relationships.
Some interactions, such as balance inquiries, are shifting to the mobile channel from higher-cost channels, such as call centers. Many of these inquiries represent additional transactions instead of the same transactions moving to different channels. For example, consumers check their balances more frequently via mobile banking than via online banking due to the convenience and availability of their mobile devices.
Tablets, with attributes of both PCs and smartphones, are growing in popularity. The number of U.S. tablet users is expected to reach 130 million people in 2014—a 61% jump since the beginning of 2013, according to a forecast by Parks Associates.
Person-to-person (or “social”) payments make it possible to send money to other people electronically. Social payments let users send and receive money to and from other people using their account numbers, email addresses, or mobile phone numbers.
Research shows that:
More members—especially younger members—think of traditional forms of payment as cumbersome and inconvenient. Those members would prefer to use their financial institutions for social payments, but they’ll be tempted to use third-party services if they offer an advantage.
Product, process, and promotion affect social payment adoption rates. To be successful, your credit union should implement a person-to-person payments service with an extensive, reliable network and infrastructure. This payments service should deliver rich functionality that’s easy to use, fairly priced, and available to online and mobile banking users.
Be sure to put processes in place that address risk and security without sacrificing flexibility in transaction limits and member convenience. Promoting the availability of social payments will give your credit union a significant competitive advantage and will boost adoption rates and profitability. Many financial institutions are marketing social payments as a value-added feature.
The evolution of social payments is far from complete. Whether used for splitting a dinner tab or paying the rent, social payments fill an important need in today’s increasingly digital world. Credit unions that offer and promote social payments will expand relationships and increase member loyalty.
To remain at the center of your members’ financial lives, credit unions must provide the ability to conduct any transaction—on any channel—at the speed members expect in this digital age.
If you focus on real-time, mobile, and social payment capabilities that meet exacting standards for integration and risk management, you’ll remain members’ institution of choice—even in this rapidly changing payments landscape.
Adapted from CUNA’s 2014-2015 Environmental Scan’s payments chapter, written by MARK SIEVEWRIGHT, president of credit union solutions at Fiserv.