Tech Budgets Are Going Mobile
Exclusive results from CUNA’s 2014 Technology Spending Survey.
Credit unions’ technology budgets (excluding staff salaries and benefits) account for 6.7% of their noninterest expenses this year on average, according to CUNA’s 2014 Technology Spending Survey, sponsored by Credit Union Magazine and conducted by CUNA’s market research department.
About half of credit unions say their 2014 technology budgets increased over the previous year’s budget. Another 42% of credit unions say their technology budgets stayed roughly the same as last year, while only 8% said tech budgets were down from last year.
The largest credit unions are most likely to have the largest increases in their technology budgets over last year. Twenty-eight percent of credit unions with more than $500 million in assets say their 2014 technology budgets are up by more than 10% over 2013. Another 25% of these large credit unions say their tech budgets increased between 6% and 10% over 2013.
These credit unions are also most likely to say their tech budgets will continue to grow over the next two years. In fact, 76% of credit unions with more than $500 million in assets say they expect tech budgets to grow.
The smallest credit unions—those with assets of less than $50 million—are most likely to say their tech budgets will remain about the same (34% responded this way). Overall, about two-thirds of all credit unions responding to the survey expect their tech budgets to increase during the next two years; 30% expect them to remain the same.
Many credit unions have been giving iPads or other tablet devices to their CEOs, senior management, or directors during the past few years. Thirty percent of CEOs, 27% of senior management, and 25% of directors have received tablets from their credit unions.
Larger credit unions (those with more than $500 million in assets) are much more likely to distribute tablets—82% of CEOs, 73% of senior management, and 79% of directors have received them. And at these large credit unions, 42% of member service representatives or other staff also have received tablets.
Since $1.6 billion asset Stanford Federal Credit Union in Palo Alto, Calif., became the first U.S. financial institution to offer online banking 20 years ago, almost every other credit union has followed suit.
Today, virtually all (97%) credit unions responding to CUNA’s survey offer online banking.
On average, 42% of credit union members with checking accounts are signed up for online banking. That average, however, ranges from 38% among the smallest credit unions to 52% among the largest ones. Almost half (48%) of the largest credit unions say more than 50% of their checking-account members are signed up for online banking.
Online banking functionality
Almost all credit union online banking programs let members transfer funds between members’ own accounts, view account activity, make credit union loan payments, view e-statements, and pay bills.
It’s less likely, however, that credit unions’ online banking programs let members make transfers to other members (72%) or apply for auto loans or other consumer loans (65%).
Even less likely are online banking options such as making person-to-person payments or applying for a mortgage (33% each), transferring funds from the credit union to a different institution (27%), opening an account as a new member (22%), or using remote deposit capture to make a deposit (20%).
Credit unions with more than $500 million in assets are much more likely to offer all these online banking features. At least 70% of large credit unions offer these features, with the exception of person-to-person payments (52%) and “live chat” features (30%).
NEXT: Mobile Banking
For the past few years, industry analysts have been forecasting the explosive consumer adoption of mobile banking. Those forecasts seem to be coming true. Mobile banking adoption among U.S. adults increased 40% in 2013—from 68 million adults in 2012 to 95 million in 2013. Javelin Strategy and Research projects that 150 million U.S. adults will be using mobile banking by 2018.
Credit unions—especially larger ones—have been quick to catch this wave. Nearly 60% of all credit unions responding to CUNA’s survey offer mobile banking, while another 26% plan to do so in the next two years. 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.
Member adoption of mobile banking is moderate, but increasing quickly. Overall, credit unions offering mobile banking say about 18% of members with checking accounts are enrolled. The largest credit unions say about 23% of members are signed up for mobile banking.
The largest credit unions are most likely to have the highest member-adoption rate for mobile banking, probably because they’ve been offering it the longest. About 15% of credit unions with more than $500 million in assets say more than 40% of their checking-account members are signed up for mobile banking.
“Make sure you offer the ancillary products younger consumers want, such as remote deposit capture via the smartphone, person-to-person payments, e-statements, and electronic bill pay,” says Chris Braccia, director of product management for D+H (formerly Harland Financial Solutions).
“Staying current with technology is a process, not an event,” he says. “To be the institution of choice for young consumers, you have to keep your self-service options fresh and be quick to adopt the new technologies they want. Stay on top of technology and young members will stay with you, even as they move. Convenience, to them, doesn’t necessarily mean physical proximity.”
About two-thirds of credit unions offering mobile banking make the service available through a mobile website and/or downloadable application, while half offer the service as SMS/text messaging. The likelihood of making it available via each of the three delivery methods generally increases with asset size. More than 80% of credit unions with assets of $500 million or more have mobile websites their members can access, while nearly 95% use downloadable apps, and more than 65% provide SMS/text messaging capabilities.
Mobile banking functionality
Almost all (90% or more) credit union mobile banking programs let members view deposits and withdrawals, make transfers between their own accounts, and make credit union loan payments.
Sizable percentages (between 45% and 65%) of credit union mobile banking programs let members pay bills, make transfers to different members’ accounts, or access e-statements. On the other hand, only 5% to 35% of mobile banking programs offer features such as remote deposit capture, person-to-person payments, transfers to other financial institutions, consumer or mortgage loan applications, new-account opening, or live “chat” functionality.
CUNA’s 2014 Technology Spending Survey also asked credit unions about additional products and services.
Findings indicate credit unions are most likely to offer e-statements, document imaging, downloadable mobile banking apps, and person-to-person payments. The three products or services credit unions are most likely to offer in the next two years include smart cards/Europay, MasterCard, and Visa cards (67%), remote deposit capture (45%), and online loan decisioning (32%).