Posted on March 27, 2019April 1, 2019 by Kirk Drake

CU-2’s Top Online Banking Providers of 2019 (Part 2)

While mobile banking dominates much of our focus these days, the reality is that the desktop favorite of online banking isn’t going anywhere. We all know credit unions rarely kill off an old delivery channel, so we can expect it is going to be around for quite some time.

In CU2.0’s Top Online Banking Providers of 2019 (Part 1), we examined many of the strategy considerations for Online Banking selection. In Part 2, we will delve into some of the more tactical but important components.

These components include some things that may greatly impact your members’ experience. For example, for each online banking provider, we’ll evaluate the quality or their assurance testing or the ability to authorize your members into things beyond the online banking world. Many of these items go beyond innovation cycles or road map, but are often represent the feature functionality that directly impacts your members.

Evaluating the Feature Functionality of Online Banking Providers

In many credit unions, switching online banking providers requires a cross-functional team of influencers. Each person has input into the decision making process, and hundreds of features are examined. At this point, we are not going to provide a feature by feature comparison, but we are going to examine some of the more impactful ones.

Online Banking Platform Vendor Comparison Guide (Part 2)

	Competitive Feature Set	Quality of PM & Quality Assurance	Extensible U/I	SDK Portal with examples	Auth from core	Allows other apps to auth	Automation of Back Office	Groups for rate and marketing	Secure Communication	Integrated marketing (ATM, Phone)
Q2	4	4	2	4	4	3	4	3	4	3
Narmi	4	4	5	4	4	5	4	4	5	2
Access Softek	4	4	3	4	4	3	4	3	4	3
Digital Insight	5	5	3	4	4	4	4	3	4	2
CUBUS	3	4	3	3	4	3	3	3	4	2
Tyfone	3	3	3	3	4	3	3	3	5	2
Alkami	4	4	3	4	4	5	4	4	4	3

Online Banking Category Definitions

This section goes into detail about the different metrics by which we ranked the online banking providers above.

1. Competitive Feature Set

This is the part you have been waiting for. Get everyone together, make a list of all the features your credit union needs. Put them in a long list and a spreadsheet, and the sum of the parts will guide your decision.

The reality is the list of features barely differentiate providers any more. Most will have 95% of everything, and the few things that are different will be unnoticeable to your members. That being said, we think it is important to compare the feature set among both up-and-coming and mature providers.

2. Quality of PM & Quality Assurance

Let’s face it: there is nothing more annoying than a new version of software where things don’t quite work as planned. Maybe a button is missing. Maybe something is misspelled. Maybe there are unplanned error messages that pop up and are hard to diagnose.

Recently, my credit union switched online banking providers. I could only get a confirmation code for two-factor authentication through Internet Explorer, but not through Google Chrome. Of course the issue will be worked out over the next few weeks or months, but my initial reaction was, “Ugh! I can’t believe the credit union and online banking provider didn’t test this more thoroughly!”

So, understanding how the preventative maintenance and quality assurance functions are at the online banking provider are key. After all, you don’t want your members being the guinea pigs.

3. Level of Allowed Customization (without professional services)

Every vendor can customize with one-off projects. But what if you want a vendor that has thought of the things you haven’t yet?

Maybe you want to roll-out new functionality or change options over time. Relying on custom code won’t get you there. Instead, you need a vendor that has customizations that allow you to differentiate for your members without special projects.

This is important for two reasons. First, every market and every group of members is a little different. Personalization for yours is essential. Second, if each change, adjustments or features take months to turn on, test, and deploy. Meanwhile, the market moves faster than your credit union can adapt.

4. Extensible U/I

Extensible User Interface is a programing protocol that allows for code to be automatically reformatted for different browsers and devices. This is a key consideration. You want your provider to make your life (and their life) easier by leveraging the Extensible User Interface protocol.

5. SDK Portal with Examples

If you are a large credit union with some development resources, you will want to look not just at the SDK or API functionality, but also at the whole ecosystem.

A mature provider will have a SDK, API, user manuals, support, and portals with examples of customizations and best practices. These resources can greatly speed up your team’s development cycles and effectiveness.

6. Authorization from the Core

In the early online banking days, usernames and passwords were stored on the online banking platform. More and more often, your members need to get information from and access to a variety of different systems.

If the username, password, or authorization credentials are stuck in the platform, then every time you switch providers, you can plan on a big disruption for your members. Ideally, the authorization will come from your core system.

7. Allows Other Applications to Authorize

As we mentioned in the section above, authorization issues are critical. Picking a provider that allows you to share your members’ credentials with other apps and systems (like online lending or mobile banking) will greatly improve your end user experience.

Anytime you can avoid giving someone an extra username or password, you should consider it a win.

8. Automation for Back Office

In Part 1, we discussed the importance of having back office systems that support the credit union’s back office team. If you are a large shop, then having back office automation is even more important.

Credit unions should leverage automation wherever possible. Whether it means providing an automatic password reset or enabling the member to perform other functions, back office automation is essential for delivering consistent and effective member support.

9. Groups for Rates and Marketing

One of the most frustrating things as a member is when the credit union keeps marketing me the same thing. It’s even worse if it’s something I’ve already signed up for.

Having the ability to create members in groups is extremely useful. Providing unique marketing messages, rates, and other forms of personalization is definitely worth using as criteria for evaluating online banking providers. It will give your members a more personalized experience.

10. Secure Communication

With all of the phishing and other security attacks out there today, having a secure communication method with your members is a great way to protect your members interest and increase trust.

Make sure you choose a provider who can deliver the kind of communications security that your members deserve.

11. Integrated Marketing (ATM/Phone/Video Tellers)

Many credit unions have deployed Integrated Teller Machines (ITMs). These machines allow for video tellers and the reduction of tellers at physical locations. In addition, members will use the delivery channel they prefer, when they prefer it.

Hence, ominchannel marketing—the practice of synchronizing marketing messages across delivery channels—is popular. If omnichannel marketing is on your credit unions desired list, then make sure your online banking provider supports the functionality with an API or other methodologies.

Why Overdraft Fees Cost You

In the olden days, yes, a bounced check was a hassle. It generated lots of paperwork. Many hands of many clerks got involved. Very probably, a fee was justified.

Not today. It’s all automated.

A few innovative, digital-first institutions (Simple and Chime for instance) already charge no overdraft fees. More will follow. But very probably, many legacy institutions will cling to the fees because it’s easy money.

Some credit unions have worked up their own ways to help members avoid overdrafts – Hope Credit Union tell about its tools in this podcast – but many smaller institutions don’t know exactly how to handle this issue.

So they charge overdraft fees, the old school style.

It hurts consumers. It’s terrible for a financial institution’s reputation. But it is easy money.

So now third party work-arounds are in the mix.

An End to Overdraft Fees

For the consumer, the message is simple: you can keep your legacy checking account but make yourself immune to overdraft fees.

How?

Meet Grain Technology, a start up in the Bay Area on a mission to stamp out overdraft fees and, in the process, help Thin File consumers create credit histories. Win win.

For the participating credit union, it’s plug and play. The member links the share draft account to Grain and Grain takes care of the rest.

And Grain has been invited to play in the Arizona fintech sandbox, where they may pilot its tools free from some regulatory constraints. The company already has plans to offer its tools to students at Arizona State, the nation’s biggest university.

Exactly what does Grain do? In a conversation with Carl Memnon, COO of Grain and a co-founder (hear the podcast here), the details emerged.

The building blocks are that Grain takes a new look at the consumer’s spending habits, income, and expenses. It generates a proprietary algorithm. This lets it predict when a consumer’s linked checking account is likely to go into overdraft and Grain can offer an injection of cash to inoculate against an overdraft fee.

The charge? Grain sees its APR ranging from 12% to 15.99% and it envisions cash injections typically ranging from maybe $25 to a few hundred dollars.

Result one: no more overdraft fees.

Result two: the consumer builds a credit history that Grain will report to monitoring agencies. For a Thin File young adult, that just may be a real blessing. Especially since many of those generations are averse to using conventional credit instruments.

Right now, Grain is looking to partner with credit unions that want to help members avoid overdraft fees. Most of those consumers, said Memnon, probably will come from the money center banks (with overdraft fees typically around $35 per incident).

What would prompt a BofA customer to ditch that institution in favor of a much smaller credit union? Just one overdraft fee could do it. Especially when the recruitment pitch is that this tool will stop overdraft fees, period.

Memnon said Grain also envisions sharing its interest income with participating institutions.

All while essentially living up to the credit union mission of helping consumers manage their money better.

Posted on March 25, 2019March 25, 2019 by Jennifer Oliver

Fail Forward Fast: Credit Union Lessons from the Fintech World

There are a lot of fads that deserve to be forgotten. Fidget spinners are one example. The mannequin challenge and Harlem Shake videos are others.

Let’s not get started on eating Tide Pods.

But some trends show us that there are other ways of accomplishing goals. Sometimes, hopping on a trend is less about fitting in, and more about finding a better way of doing things. Without trends, we wouldn’t have text messaging, YouTube tutorials, or ridesharing apps.

Here are a few things that credit unions can learn from the fintechs with whom we partner (and against whom we compete).

1. Push the Pace

Did you know that Amazon makes a software change roughly every 11 seconds? That’s about 8,000 changes per day.

Granted, technology changes are one of Amazon’s core competencies, but still—that’s a lot of changes.

Amazon is helping countless startups, fintechs, researchers, and individual users embrace machine learning, natural language processing, cloud hosting, and more. These kinds of technologies could drastically disrupt our industry (as well as many others).

Meanwhile, many credit unions still aren’t on the cloud.

At what point should credit unions consider these technologies an existential threat?

Well, that depends. If your credit union doesn’t trust new technology and wants to stick with the old-fashioned, tried-and-true way of doing things, then you should consider emerging technologies and software changes a threat now.

However, if you’re an early adopter of innovative technologies and software changes, then the future holds a lot of promise.

2. Understand Trends

Remember all that nonsense about fidget spinners and Tide Pods? Sure, they were obnoxious, but they revealed something incredible:

People are willing to try things.

One of the more interesting trends that has emerged in the last decade is the pop-up business model. Pop-ups are essentially strategically-deployed short-term shops. Pop-up retail shops see higher sales than online stores. Restaurant and bar pop-ups pave the way for new brick-and-mortar establishments.

South Bay Credit Union decided to hop on the trend: we set up a branch for $2,300, and we’re using it to reach new members, provide another location for existing members, and help people near our pop-up location better understand their finances and financial options.

It’s a risk, but it’s a risk we’re willing to take.

Understanding trends means a lot more than hopping on bandwagons, though. Understanding trends also means being engaged with new developments and changing regulations.

Most importantly, understanding trends means understanding members. Listening to member needs is critical to the future of credit unions. It’s the credit union’s job to give its members what they want (within reason, of course). Often, adopting emerging technologies or rethinking old strategies is the best way to make that happen.

3. Think Like a Fintech

Again, within reason. Here’s why: 90% of startups fail.

The reasons for that are various, of course. Sometimes it’s a bad product. Sometimes it’s lack of money. Sometimes their competitors just get there first. Sometimes the development cycle takes too long, or the scope of the project gradually expands, hogging resources.

Nevertheless, many startups make it. The ones that make it share several attributes that allow them to overcome obstacles or changes in direction, like prioritizing agile processes and hosting hackathons.

Here are a few of the most common attributes of great fintechs and startups:

They have a great product
They don’t ignore things—they actively listen and seek out feedback
They work on the business not in the business (minutiae of the day-to-day)
They emphasize growth
They recover quickly from setbacks

Credit unions already have a leg up in most of these areas. Great product? Check! Our rates are better than banks, and our customer service is unparalleled. Seek feedback? Double check! Taking care of our members is priority number one.

On the other hand, credit unions aren’t exactly in the business of creating new products or technologies the way fintechs do. With that in mind, here are some ways that credit unions can still serve as incubators of innovative ideas:

Meet with startups and fintechs
Roll out live betas
Listen to new ideas
Communicate with partners
Look outside typical networks

As technology continues developing at a rapid pace, we can play our part by keeping up with it. As we do, we’ll come across products, services, and strategies that benefit our members, our credit unions, and our communities.

Plus, we won’t be stuck with typewriters and personal checks when the rest of the world is using ipads and Venmo.

4. Create a Culture of Innovation

Fortunately, we’re moving into an era in which people appreciate creativity, effort, and authenticity. At no point in history have humans had such a green light to experiment, try new things, pursue exciting avenues for growth.

We support each other’s artistic works in progress on social media. We cheer on our friends as they train for their first triathlons. We let people know we support their efforts, even if they don’t always make it. You will likely find more support if you try and fail than if you never try at all.

Creating a culture of innovation means incorporating the above three ideas into one. Credit unions have to be willing to try new things and fail like a fintech or a startup. They have to understand what people—and the market—need. And, perhaps most importantly, they have to do it quickly.

Here are a few suggestions about how your credit union can speed up:

Build a culture of experimenting
Budget for unknown opportunities and failures
Create trust with the board
Report progress
Keep contracts short or cancelable
Think of vendors as partners
Learn at every opportunity
Don’t be afraid to pull the plug

The ultimate question is this: are you putting yourself out there? The answer should be “yes.”

Not everything is going to work out. Sometimes, it might seem like nothing will. However, surprisingly often, pushing for innovation will help you to discover or create something really cool. Or, at the very least, you’ll distinguish yourselves from the status quo.

You’ll rise above a sea of complacency, and you might even have fun doing it.

Tasting Our Own Cooking

At South Bay Credit Union, we’re experimenting with new technologies and ideas. We may not be making a software change every 11 seconds, but we’re doing our best to stay on top of critical developments and changes in our industry.

We opened a pop-up branch in a business center. We introduced CU Live video chat to support video banking for our members. We introduced Lease Look Alike and Visa’s Credit Card MobiMoney for our members’ convenience.

Not everything we’ve tried so far has worked. But that’s okay. We’re not here only to learn how to succeed.

We’re also here to learn how to fail. And we’re failing forward.

If you’d like to learn more about some technologies that can help your credit union, then check out the following blogs:

Email Marketing vs. Automated Marketing for Credit Unions

What Credit Union Marketing Automation Is, and Why It Matters

Jennifer Oliver is the President and CEO for South Bay Credit Union. She was previously the CEO for California Bear Credit Union. Overall, she has 30+ years of credit union experience, and 22+ years executive leadership in credit unions, including a focus in progressive management, sales & operations.

Posted on March 21, 2019April 1, 2019 by Kirk Drake

CU-2’s Top Online Banking Providers of 2019 (Part 1)

Online banking is a dynamic and ever-changing landscape. Since Paul Fiore and Digital Insight launched and dominated the market almost 20 years ago, the marketplace has morphed, changed, and innovated.

Yet, in some ways, things haven’t changed at all.

Online banking is still the most dominant member connection point. Aside from the credit union’s website, there is no place that is more influential on member brand experience than through your online banking portal. If you have a clunky product or a stale design, that is how your members see you every day.

On the other hand, if you have a great user interface, where it is easy to add products, make changes, or help members understand their financial life better, then you will seem sophisticated, transparent, trustworthy, and innovative.

Evaluating Online Banking Providers

There are lots of ways to evaluate online banking vendors.

Usually, credit unions will establish complex committees or do RFPs and spend months try to compare a handful of features that probably don’t really matter.

In reality, if your credit union wants to pick a good product, they should probably ignore most of that.

Frankly, RFPs are great at telling your vendors how to solve the problem that you are paying them to solve. However, they are terrible at evaluating the things that actually make brand differences: the people.

RFPs tend to focus on feature functionality, which is like trying to drive the car using your only rear-view mirror. In the technology world, what you did yesterday has almost nothing to do with what you will do tomorrow. It’s critical to look forward, not backward, when working with online banking providers.

Most of the history of online banking has followed the same story:

A startup launches.
The founders are nimble, efficient, customer oriented, and innovative.
Credit Unions sign-up.
Business overwhelms the founders and they start building teams and raising money.
Eventually, they sell and exit to a bigger conglomerate that treats development like an RFP. Slow and steady. Mature processes.
Meanwhile your members suffer as change requests take months or years, the UI doesn’t change, and your ability to add new functionality grinds to a halt.

However, online banking providers are learning new stories. There are several online banking providers who are really showing their commitment to providing the best services available.

This guide is designed to help you review online banking providers in key categories. Good luck!

Online Banking Platform Vendor Comparison Guide (Part 1)

Provider (Scale of 1 to 5 – 1 being lowest)
	Nimbleness	Innovation	User Interface	Core System Choice	SDK	API Support	Back Office Admin	Security	Analytics	Marketing Support	Roadmap	Fintech Partnerships
Access Softek	3	3	4	5	Yes	Yes	4	4	4	3	3	Yes
Alkami	3	4	4	4	2	?	4	4	3	3	4	?
CUBUS	4	3	4	3	?	?	4	4	4	4	4	?
Digital Insight	2	2	3	5	?	?	3	4	3	3	2	Yes
Narmi	5	5	5	3	Yes	Yes	5	4	3	3	5	Yes
Tyfone	3	3	3	5	?	?	3	4	4	4	4	Yes
Q2	2	3	4	5	Yes	Yes	4	4	4	3	3	?

Online Banking Category Definitions

This section goes into detail about the different metrics by which we ranked the online banking providers above.

1. Online Banking Nimbleness

When Amazon first started, most people bet that traditional stores would fight them back. But 20 years later, Jeff Bezos and Amazon knew what the rest didn’t: that traditional, entrenched providers become cautious and slow, allowing new entrants into the market.

The key to Amazon’s success over time has been their nimbleness. Creating a culture and ecosystem that changes quickly is essential. We live in a dynamic world: consumer expectations—and the technologies they use—are changing constantly changing.

Here at CU2, we like providers that resist the temptation to create boundaries and structure. The pace of change is accelerating beyond what traditional approaches can keep up with. Nimbleness is essential.

2. Online Banking Innovation

Innovation is all about seeing where things are going, and then being willing to change and adapt quickly. In our minds, innovation is guided nimbleness.

When the European Union adopts GDPR or Open Banking standards, then it’s only a matter of time until those standards come to the US.

It’s like when California adopts new fuel standards—whether you like it or not, their market is large and influential enough to define the norms.

Hence, picking a vendor that is innovative, who knows the trends, and sees where things are going is essential.

Don’t be stuck on what things looked like yesterday. Recognize that you need a platform that is built for speed, innovation, flexibility, and what the future holds.

3. Online Banking User Interface

Because online banking is such a key brand influencer for your members, you need a great UI.

Here’s the good news: most online banking providers are decent.

Still, you want a UI that changes based on the consumer or the demographic. Why feed all of your members the same sandwich? Instead, if some like it spicy or vegan, you should be prepared to give it to them.

Make sure you pick a vendor that has a UI that A) looks great and works, and B) is dynamic for your different segments.

4. Online Banking SDK/API Support

We highly recommend that you pick a provider that supports APIs and SDKs. That goes double if the provider leverages their own APIs to customize, develop, and deliver software.

An API structure means they are built for speed and efficiency, have standards5 and processes for maturity, and will be able to deliver unique and differentiated products for your clients.

Or, at least an API will allow you to move forward without them.

5. Online Banking Back Office Admin

Of course, you want your primary decision-making factor to be the end member experience.

But what if the back-office is so terrible that ruins the member experience?

Maybe it’s tough to reset a password. Maybe the settings are impossible to figure out. Either way, don’t ignore the back-office administration function. Make sure your member-focused employees can do their jobs efficiently and expertly so that you can deliver a great experience to your members.

6. Online Banking Core System Choice

This is just a yes or no question:

Does the candidate support your core?

Ask this first, because if they don’t support your core, it might take a while!

7. Online Banking Security

PCI, SSAE, Dual Factor—you name it. Online banking security is essential for both the NCUA and your credit union’s reputation.

All the providers in this guide have solid security. However, you should still understand where it’s going. Do your due diligence to ensure they meet all the NCUA IT Security Standards.

8. Online Banking Marketing Support

We can’t tell you how many times we see an online banking platform that has binary or simplistic marketing tools.

Sure, you can ask all members to get a certificate for the hundredth time, but if you want people to pay attention, you need some dynamic marketing content. You need highly individualized approaches customized for each member.

The best providers have good marketing support, and they understand how important it is to the credit union’s future business. After all, it may be great to get a member in the door, but if you can’t get them fully engaged, then you may spend a lot of energy on nothing.

9. Online Banking Roadmap

With such a dynamic environment, it’s essential to know the vision and future for the product you are picking.

This is a key way to understand the future innovations that are coming. If the banking provider is just looking for the next “feature” or thing to round out the product, then they may not be thinking world domination (or at least credit union world domination).

Without a roadmap—a clear vision for the future—they may not be willing to make the tough choices, innovations, investments etc. that will make them a key provider into the future.

10. Online Business Banking

If your credit union doesn’t offer business banking, then don’t worry about this one.

However, if you’re thinking this is a key part of your future, then make sure you understand what is needed. Decisions made for business don’t value loyalty the way that personal decisions do, so make sure you are picking something that aligns with your credit union’s small business future.

11. Online Banking from a Core Provider

This is always a problem, good and bad. The upside is their integration is usually better, faster, and more robust. (Of course, it should be, given that the core provider owns it.)

The exception to this rule would be when a core provider buys an online banking provider, then piecemeals the interface together. Be wary of that situation!

The downside to getting your online banking solution from a core provider is that it’s not a core competency of theirs. They may say it is, and it is certainly a core revenue generator for them, but it’s not a core competency.

Core providers have always lagged here. Whereas an online banking-only provider spends all 40 hours a week focused on online banking, a core provider has other development issues to address. They will never be as advanced as those who focus on the online banking space full time

12. Online Banking Contracts

Changes are coming faster and faster in the space. What is cutting edge today is commonplace tomorrow.

Why would you put yourself in a situation where you were stuck with an inferior product for another 3 years?

It’s amazing how many credit unions put themselves in 5, 7, and even 10-year contracts with technology partners. Twenty years ago, signing a 10-year contract with IBM was a good idea. Today, that is an unheard-of, colossally bad idea. And yet, we see it all the time.

The pace of change in technology creates churn every 18 months. Signing a contract longer than 3 years is asking to be disintermediated by new, faster, more elegant online banking solutions.

American consumers will switch platforms due to ease of use issues. Hire a professional contract negotiation provider to help you get the best price without the obscene contract length.