Welcome to episode 39 of the CU 2.0 Podcast. Today is all about the future of Credit Union digital banking.
It’s CU 2.0 Fintech Friday! Today, Chris Otey sits down with Pay By Car to discuss all things credit union, fintech, and digital innovation.
PayByCar is a payment system that streamlines purchases made in and from cars. Instead of going through the often-clunky process of handing a debit or credit card back and forth between driver and cashier.
In-vehicle purchases exceed $200bn yearly. From toll roads to car washes, drive-through coffee stands to fast food restaurants, paying on the go accounts for a significant portion of daily purchases. If you can imagine paying at the pump with an E-Z Pass, then you’re on the right track to understanding PayByCar.
PayByCar allows people to forego the usual card- or phone-based transaction. PayByCar transponders reduce in-vehicle transaction times by eliminating the need of a middleman.
Credit unions who wish to partner with PayByCar can offer their members a simple, easy payment system for in-vehicle transactions. In-vehicle payment systems are a growing technology with increasing demand. Giving members an in-vehicle payment option can reduce their transactional friction and increase their appreciation for their credit union’s services.
If this sounds like an intriguing credit union–fintech partnership, check out the video and PayByCar snapshot below!
Credit Union Fintech Snapshot: PayByCar
Top 3 Problems Solved
- In-vehicle payments
- In-vehicle transaction times
- Drive-through sales
PayByCar Founder: Kevin Condon
PayByCar Market Strategy
Credit Unions and individual drivers.
Credit Union Fintech: PayByCar in the News
Interested in seeing more fintech entrepreneurship? Check out the CU 2.0 fintech infographic, Death by 1,000 Cuts. You can see firsthand the impact fintechs have had on the credit union industry, as well as how fintech innovation can improve your income statement, balance sheet, interest margin, services, and more.
Credit Union 2.0 believes fully in the power of credit union and fintech partnerships. With the shared goal to redefine multifaceted financial services models look like to members, more credit unions are looking to partner with forward-leaning fintechs.
If you want to learn more about credit union–fintech partnerships, click here.
It’s the Credit Union podcast! CU 2.0 is excited to bring you the fifteenth in a series of credit union podcasts from Robert McGarvey. Welcome to the CU 2.0 Podcast, regular interviews with credit union leaders, thinkers, movers, shakers and more.
Talk to Cathie Mahon and it’s a fast ride into what mission makes a credit union special, distinctive and in her mind, the answer is clear: serving the underserved and usually that means economically disadvantaged.
She has tantalizing insights too. For instance: she tells why the business model of community development credit unions may, in fact, be primed for greater success than the model followed by most credit unions.
She also tells how the NCUA handcuffs newly chartered credit unions and this may set some up for failure.
And she has advice on designing a mobile banking app that betters serves the economically disadvantaged.
Listen up, it’s a good podcast that just may persuade some struggling conventional credit unions to investigate tweaking their business model and to embrace more community development outreach.
Click the photo below to listen now!
By Robert McGarvey
The Citi 2018 Mobile Banking Study told us what we should already have known: consumers love a decent mobile banking app. And they use it a lot.
How often? Citi said that mobile banking apps come in third, after only social media apps and weather.
That’s based upon a survey of 2000 US adults.
How often do your members use your app?
The question is not theoretical. It’s in your face, life and death. If your members don’t like your app – and I personally dislike the apps used at the two credit unions I belong to – what’s your future look like?
Almost half – 46% of consumers – told Citi they have increased their mobile usage in the past year. Nearly two thirds of Millennials have done same. Expect that number to keep trending higher. As more of us discover that we can easily do most routine banking chores on a phone, we’ll migrate there – especially if we get the message that generally a mobile phone banking session (via cellular) is more secure than the same session on a Windows computer connected to WiFi.
Citi threw more numbers at us. 8 out of 10 of us use mobile banking nine days a month. One-third of us mobile bank 10 or more times a month.
91% of us prefer mobile banking over a visit to a branch – and don’t expect that number to decrease. Branches are dead, except for special purposes. If a consumer needs a wire transfer as part of a home purchase, sure, he/she may go to a branch (I did exactly that five years ago); it just seems simpler. But for routine banking chores – including check deposit – it just is vastly more time efficient to do it in one’s home, work, or car.
Personally I just deposited three checks via MRDC and transferred money from one account to another, all done at my desk, all done within five minutes. Going to a nearby branch would have eaten up at least 30 minutes and who has time for that?
Not many of us anymore.
According to Citi, we estimate we save 45 minutes a year by using mobile banking.
“Mobile banking usage is skyrocketing as more consumers experience the benefits of greater convenience, speed and financial insights driven by new app features and upgrades,” said Alice Milligan, Chief Digital Client Experience Officer, U.S. Consumer Bank, Citi, in a press statement. “Over the past year we’ve witnessed this increase in engagement first-hand, with mobile usage in North America increasing by almost 25 percent, and we don’t see this trend slowing down any time soon.”
Mobile banking users also told Citi they feel more in control of their finances. 95% believe they know their exact balance right now, compared to 85% of non users. Citi elaborated: “Nine out of ten (91 percent) have experienced additional positive outcomes from mobile banking, including greater awareness of their financial situation (62 percent); fewer concerns about managing their finances (41 percent) and a better understanding of the services offered by their bank (38 percent).”
Now for the bad news for you. Read this: “Milligan added: ‘At Citi, we launched over 1,000 digital features in the U.S. in 2017, a nearly 500 percent increase over the previous year, and we continue to reimagine the client experience through innovative capabilities that deliver ease and simplicity for our cardmembers. In recent months, we have introduced a number of features to further enhance protection and security, such as face ID sign-on for the Citi Mobile App on iPhone X and email notifications when we detect unknown attempts to access customers’ accounts.’”
How fast are your vendors upgrading your apps? Judging by the ones at my credit unions I’d say not frequently.
Not nearly often enough. Not nearly enough to keep pace with the likes of Citi and Chase.
Can you say better about your apps?
You need to be able to, That’s the reality for today.
When I talk with senior executives at many credit unions a common complaint about their apps vendors is that upgrades come too slowly. It’s rare that I don’t hear that complaint.
But just maybe it’s no longer good enough just to complain.
Take action to make faster – richer – upgrades a regular reality. That’s how to survive today.
By Robert McGarvey
The press release headline had me at go: “D3 Banking Technology Survey Finds More than Two-Thirds of American Digital Banking Users are Frust.”
Nah, I didn’t know what “frust” means either. The Internet tells me a secondary slang meaning is frustrated.
And, you bet, I too am frustrated with credit union mobile and online banking – and I’m not alone, per D3, and that should definitely worry credit union execs.
I have accounts at two credit unions. Digital products at both are inferior to Chase, where I also have an account. If I could have only one account – and if I weren’t a big believer in the credit union movement – it would be with Chase. I hate to say that. But it’s true and, thankfully, I am not limited to just one account.
Chase is forever improving its digital products. My credit unions aren’t (and, yes, I know they are locked into their vendors’ upgrade cycles – but why accept that?).
Five years ago just having mobile banking was good enough. 20 years ago just having online banking, however feeble, was cause for a celebratory press release. In 2018 that definitely is not enough.
Not even close.
D3 proves that with its Harris poll that surveyed 1600 digital banking users (who had used it in the past 12 months) and they were quick to vent. Two in three – 68% – expressed frustration with their digital banking experience.
Count me among them. Yesterday I logged in to change the PIN of my debit card. No can do in my credit union’s mobile banking app. I eventually called an automated line and accomplished the task and how 1985 is that?
Why can’t I do a simple, mechanical task like changing a PIN on a mobile phone – and, really, do you think call centers do a better job of screening out fraudsters? Ask Microsoft co-founder Paul Allen about that.
Nor is there evidence to suggest doing this via online or mobile banking is inherently riskier than via a telephone call.
So why can’t I do it?
A bottomline reality is that in 2018 an increasing number of consumers want – indeed demand – that their mobile banking app and online banking let them do anything they could do in a branch visit.
D3/Harris did find that there are age differences in expectations about mobile banking – but the differences aren’t as big as you might have hoped for. Said D3: “The survey revealed that digital banking users ages 18-34 are more likely than those ages 55+ to be frustrated with their digital banking experience, as 73% of the younger group indicated that they have been frustrated with their digital banking experience over the past year, compared to only 61% of adults ages 55+.”
Even tho credit union members skew older, it is safe to assume 6 in 10 of them are dissatisfied with their mobile banking experience.
For sure, too, members demand a feature rich digital banking experience: “The survey also found that more than half of digital banking users feel it is important for financial institutions to provide mobile deposit (70%), P2P services (66%) and mobile account opening (51%) as part of their digital banking offerings,” relayed D3.
Here’s the frightening kicker: “32% of digital banking users report that they are willing to leave their current bank or credit union for a better digital experience.”
That is blunt: one in three members who use digital services say they just may shift financial institutions to get better services.
Mark Vipond, CEO of D3, observed that that’s the real issue here is “the number of American digital banking users – 32 percent as found in our survey – who are willing to leave their current banking relationship for a better digital experience. As new types of technology continue to be introduced, financial institutions are going to need a strategy built on technology that allows them to innovate and introduce new features and functionality faster than they have to date.”
That’s the reality. Today consumers benchmark your app and website against Amazon, Netflix, Google and the other top digital services – and, sadly, at all but a handful of financial institutions the digital products are mediocre at best.
What’s the solution: commit, today, to improving your digital offerings just about daily, certainly weekly. Word of advice: smart credit unions are committing to continuous improvement of their digital offerings. The era of a once or twice a year update is over.
The path to credit union extinction is paved with complacency.
Particularly with Millennials, credit unions have key positive attributes – they are local, they are community-minded, they generally are intimate scale, and they aren’t “big business.” All good. But will Millennials suffer a poor digital experience to do business with a credit union with bad online and mobile offerings?
Most credit unions seem to be betting that indeed Millennials will.
I don’t think they will.