Tech Trends

Members’ needs must drive technology innovation and adoption.

September 1, 2012

Keeping up with technology inno­vation is like playing a game of “connect the dots.” The challenge: The dots keep popping up in unpredictable places. The key to winning this game is anticipating where the next dot will appear.

It’s nearly impossible to predict technological innovation because there are so many moving parts. Today’s technology innovators involve mobile solutions, virtualization, cloud computing, security, “everything as a service” applications, and business intelligence.

To prepare for the “next big thing” and position your credit union to take advantage of innovation, industry leaders and vendors recommend these six steps:

1. Go mobile. Since it has quickly become an expected service, offer mobile banking while monitoring mobile payment solutions, such as the use of near field communication (NFC). NFC enables contactless payments via a payment chip in the users’ mobile phones.

“It’s not too late to be early in mobile banking, but it’s getting there,” says Payton Dobbs, Google’s director of industry, banking, and lending.

2. Look for geolocation opportunities. Credit unions might soon be able to make personalized offers to members who carry smartphones enabled with geolocation software. It could be possible, for example, to send a vehicle loan pre-approval message to members who linger at or near auto dealerships.

3. Deliver personal financial management tools to help consumers quickly review their financial status and plan for the future. Offering these tools builds loyalty.

4. Match offers to members’ personal information. Members need products and services that are relevant, given their current circumstances.

5. Consider person-to-person payments. Consumers who’ve adopted electronic payments want to use electronic methods to pay other individuals, not only businesses.

6. Monitor creative combinations. Tools such as speech recognition and geolocation enable members to use PCs or “post-PC” devices in a variety of locations for a variety of purposes.

Quick adoption

Remote deposit capture (RDC) is one example of how quickly innovations occur, says Harry Gunsallus, senior vice president of technology and operations for $3.5 billion asset Redstone Federal Credit Union, Huntsville, Ala. The credit union began by looking at both desktop and mobile RDC, but soon decided consumers’ rapid adoption of mobile made a desktop solution unnecessary.

In its first six months following its December 2011 launch, the credit union’s mobile-only RDC solution processed more than $420 million in deposits, with no losses.

The trends are here and gone so quickly that you really have to be sensitive to market timing, Gunsallus says. “We’ll never do a two-year project again. It has to be six months, and less if possible.”

Redstone Federal’s next innovation will combine products and data to make it possible to assist members experiencing significant life events—job loss, retirement, divorce, or home destruction by fire or natural disaster.

“That’s what technology innovation will allow our credit union to do—to provide compelling and relevant offers to the individual member at that moment,” Gunsallus says. “That moment requires technology innovation on the back end to make it fast, easy, and convenient.”

Mobile RDC allows members to use smartphones to deposit checks when they’re away from home, which might mean traveling the world on business or moving to another state to attend college. The strength of the relationship fostered by RDC creates a “barrier of entry” to competitors who want your members’ business.

Remain relevant

This illustrates how keeping up with technology innovation is essential to meeting the needs of members, fending off competitors, and sustaining efficient operations, says Gunsallus. “Ultimately, we believe technology innovation is the key to creating relevant and compelling offerings for our members.”

In addition to its RDC initiative, the credit union updated its technology infrastructure through:

► Selecting a new core processor in October 2009;

► Virtualizing its servers in 2010; and

► Virtualizing its desktop infrastructure this year.

These improvements positioned Redstone Federal to develop and share applications for process improvements and operational efficiency with other financial institutions.

Equally important, Gunsallus says the credit union is pursuing technology innovations that change the way members think about their credit union, while creating barriers to the growing number of competitors that try to lure members away.

Competitive advantage

The trend toward greater sophistication in analyzing data with business intelligence tools is helping $1.1 billion asset Oregon Community Credit Union, in Eugene, develop products and services that provide a competitive advantage.

You have to be nimble to acquire, manage, interpret, and leverage data—and to do it quickly, says Ron Neumann, chief financial officer.

Oregon Community’s member data research revealed that all demographic groups are confounding expectations with rapid adoption of mobile banking and other tools. “It isn’t only Gen X and Gen Y that want these improvements and technologies,” says Neumann.

Mobile banking, for example, was introduced in February 2012 with an expectation of attracting 2,500 users from among the credit union’s 104,000 members by May 2012. The credit union’s rapid rate of adoption, however, has it on track to have 10,000 users by year-end.

The pace of technology adoption, says Neumann, adds a sense of urgency to monitoring trends and introducing products. Behind the scenes, Oregon Community has virtualized its servers and made infrastructure improvements to enhance security and efficiency so it can adopt new technology quickly. Many technologies have a short life, he says, sometimes three years or less.

“No sooner are these technologies the leaders of the present than they become the laggards of the future and are replaced by other solutions,” Neumann says.

Strengthen operations

On-demand applications and cloud computing for processing, communications, and security help speed delivery and strengthen operations.

“The cloud is driving the ways information and technology are being consumed, and changing the way people work,” says Andrew Jaquith, chief technology officer for Perimeter E-Security.

Some credit unions have moved their email to cloud providers rather than upgrading in-house software, he says, while others are using cloud providers to host mobile applications.

Cloud integration will allow single-provider, one-platform solutions to support all enterprise security needs, Jaquith says. That approach can help credit unions take control of networks, while eliminating the infrastructure and staff required by a traditional in-house approach.

But some authorities remain doubtful the cloud is ready for widespread adoption. The Federal Financial Institutions Examination Council (FFIEC) advised credit unions and other financial institutions in July that using outsourced cloud computing providers carries legal, regulatory, and reputational risks. Oregon Community is among the financial institutions that refrain from using cloud applications due to security concerns.

Mobile influence

Mobile devices such as smartphones and tablets are changing the way consumers interact, particularly young consumers. Nearly three-fourths of Internet-capable devices sold are expected to fall into the “post-PC” category by 2015, notes Jaquith.

“These devices will continue to play an increasingly larger role in customer service and engagement,” he says.

Credit unions must think strategically about how smartphones and other devices fit into their priorities, according to Joerg Engelhardt, vice president, financial industry marketing for Diebold.

Adopting products and solutions that enhance your credit union’s connectedness with its members will enhance its competitiveness, Engelhardt says. Diebold seeks to find innovative ways to apply proven technologies to increase operational efficiency and improve consumer experiences.

Diebold 4G LTE ATM

Diebold’s 4G LTE-enabled ATM was the first in the world to utilize 4G technology.

“A 4G-LTE connected ATM, for instance,” Engelhardt says, “takes the successful mobile communication network popularized by mobile phone providers and applies it to the financial services sector to allow advanced functionalities on the self-service channel, such as two-way video interaction at the ATM.” Virtualized ATMs replace ATMs’ onboard computers with links to a centralized computing resource.

Changing interaction

Personal financial management tools are evolving to help members who use online banking do a better job of managing and moving their money, says Albert Ko, vice president, product management, at Intuit Financial Services.

Intuit is upgrading its platform to allow greater flexibility and accessibility to credit unions and third-party developers, he says. The upgrade also will allow Intuit to combine data from financial institutions and its 60 million customers to deliver insights to help the “little guy” save or make money and gain new ideas.

“It’s not about delivering the newest or shiniest widget, but about truly solving important customer problems so well that they don’t go back to their previous way of doing things,” Ko says.

Intuit research revealed that consumers who access their financial information via a computer, mobile phone, and tablet average 31 interactions per month—compared with 18 interactions per month for consumers using a computer and a mobile phone, and 10 interactions per month for consumers using a computer, alone.

Credit unions can empower members with simple, effective mobile payment and money management products, adds Jim Merrill, senior vice president of sales, at Fynanz. This boosts member engagement and retention.

If credit unions fall behind and don’t deliver these products, they might lose member loyalty to banks that offer the technology sooner, Merrill says. Life cycle lending will be essential in the years ahead, he adds.

He recommends using student loans as a gateway for college-age borrowers, and private student loan consolidations for young, working members.




1. 2012-2013 Credit Union Environmental Scan,


2. CUNA Financial Exchange white paper,; select
“white papers” under “tools and resources.”

CUNA Strategic Services alliance providers

Open Solutions


New approaches

Both credit unions and vendors recommend watching marketplace leaders such as Apple and Google to see how new applications and devices shape financial services and everyday products.

Credit unions must look beyond the financial services market to monitor new applications and approaches that change how we handle everyday tasks, says Gunsallus. Some new vehicles, for example, offer wi-fi hotspots and voice activation to interact with laptop computers.

As the timeline for consumer adoption becomes more compressed, credit unions must be prepared to act quickly and adapt technology to serve members in new ways.

“We need to watch these trends so we understand them when they take off,” Gunsallus says. That’s key to taking advantage of innovations that serve member needs.