Digitalization and Mobilization: The New Era of Opportunity for CUs

CUs need to enable their members to move at the speed of life today.

April 9, 2015

Digitalization and Mobilization: The New Era of Opportunity for CUs

On Nov. 3, 1962, The New York Times printed a particularly bold headline: “Pocket Computer May Replace Shopping List; Inventor Says Device Could Tell Grocery in Advance What Customer Needs.”

This was written back when credit cards were just being introduced to the world—and well before ATMs became the new, automated banking option in the 1970s and 1980s.

Although the world has changed quite a bit over the past few decades, the foundation for our digitized and mobilized ecosystem has been apparent for more than 50 years.

In the new millennium, we are transitioning toward digital and mobile financial services, benefiting both credit unions and their members in the process.

However, despite substantial investments in digital and mobile technology, credit unions have yet to maximize adoption rates—and return on investment—from their membership.

‘Digital and mobile bankers’ drive profitability

To increase adoption rates, credit unions need to assertively promote the benefits of digital and mobile services, ultimately inspiring members to become “digital and mobile bankers.” This is an increasingly vital segment for growth and profitability.

Last year, Fiserv conducted a proprietary research study which reveals that across all age groups, consumers who use digital and mobile channels for banking services generate consistently higher fees than nondigital bankers.

The same study also revealed that mobile bankers specifically generate higher fees than online bankers.

Based on this research, it is evident that credit unions need to deliver high-quality mobile banking and payment options to survive. Consumers want cutting-edge services such as Apple Pay and mobile deposits, and institutions that fail to adopt these new technologies will inevitably struggle as the world shifts to them.

Marketing is mission-critical

Leaders in the financial world often are surprised to learn that about 55 million Americans do not bank online regularly—and many of these people are credit union members.

That being said, credit unions need to specifically target such members with effective marketing campaigns which drive them to embrace mobile banking and payments.

With competition in mobile banking and payments rapidly accelerating, nonfinancial services firms are seizing these markets with disruptive technologies. Credit unions must strategically market all of their digital and mobile services or they will lose relevancy and loyalty from members.

In line with the 1962 predictions of The New York Times, data analytics creates endless possibilities for consumers and credit unions alike. When closely integrated with marketing channels, data analytics empower credit unions with actionable intelligence to grow fees, loans, revenue, and wallet share.

Consequently, over the next decade, as competition heats up even more, all financial firms will inevitably move toward innovative data analytics programs.

For example, “relationship banking” is a newer term with ever-increasing prominence, because it shatters the glass ceiling on how organizations leverage transactional data to drive profitability.

Some experts will argue that relationship banking enables unprecedented levels of insight into the lives of members and, moreover, that data-driven intelligence can provide more potential value than transactions alone.

As this happens, new data analytics tools are rapidly emerging alongside digital payment technologies like Apple Pay, EMV (Europay, MasterCard, and Visa), and tokenization.

When leveraged properly, credit unions can better interpret member behavior and capitalize on additional revenue opportunities. But this requires having the right resources, technology, and information security in place.

Embrace the new opportunities

Credit union leaders must embrace the decisive shift toward digital and mobile financial services. Industry consolidation will only continue as competition from nonfinancial services firms intensifies.

Members will remain loyal to credit unions that stay up-to-speed with their demands. Therefore, credit unions must acclimatize to changing consumer expectations and embrace the innovative technology behind it all.

In 2015, the speed of life is a bit faster than in times past. This is particularly true in how we pay for everyday goods and luxury items.

With that in mind, credit unions need to enable their members to move at the speed of life today. This is achieved through a wide array of mobile capabilities, including person-to-person payments, online bill pay, mobile deposits, and other member services.

There are also peripheral services that credit unions should offer members, such as mobile alerts, mobile photo bill pay, and debit and credit card management. Each of these services add value to the mobile payments cycle, and as such, are conducive to an increase in the mobile penetration rate of members.

Right here, and right now, credit unions have a landmark opportunity to shape the new mobile payments ecosystem that members are demanding.

Credit unions that remain ahead of the curve will also reap the associated benefits: increased transactions, loans, fees, revenue, and, most importantly, increased member loyalty.

MARK SIEVEWRIGHT is president of Fiserv Credit Union Solutions.