News Flash: Mobile Banking Apps Now Among the Most Used 

By Robert McGarvey 

For Credit Union 2.0 

 

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. 

Consumers Say Boo To Your Digital Banking Products – Now What Do You Do? 

By Robert McGarvey 

For Credit Union 2.0 

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. 

Do you? 

Mobile Banking Rules – and Where You Still Stumble 

By Robert McGarvey 

For CU 2.0  

New research out of Javelin, sponsored by identity specialist Jumio, makes plain multiple facts and the central one is that digital banking rules and it does so across generations.  It’s not just a Millennial thing anymore. 

Another key takeaway: most financial institutions – eyes on you – stumble in many key places, particularly in deploying mobile banking. This is eroding member loyalty: they will sometimes simply flee to another institution. 

And security concerns continue to be a bother for many users, according to the Javelin research. Despite the fact that generally a mobile banking session over a cellular network is much more secure than one over an online network.  No matter. A lot of users remain very worried about safety and digital banking and the smart institutions are addressing these fears. 

What all this means is that mobile banking – increasingly the channel that matters in banking – is where credit unions have to double down on efforts to compete with the money center banks and the fintechs that continue to nibble at the user base of smaller, legacy institutions (talking about you, Amazon).   

Al Pascual, SVP, Research Director and Head of Fraud & Security at Javelin Research elaborated: “To capitalize on the growing demand for mobile banking as millennials grow in spending power, financial institutions must simplify user experience and address ongoing concerns around security and fraud.” 

Dive deeper into the report and the results can surprise.  For instance, although 76% of Millennials now regularly use digital banking, 77% of Boomers do – and, yep, that says Boomers have greater acceptance of the channel. 

But Millennials are way ahead with mobile banking. 62% use it monthly, compared to 34% of Boomers.  Also, claimed Jumio, “millennials report stronger satisfaction with nearly all aspects of mobile banking, compared to Generation X and Baby Boomers.”  

Millennials definitely have fewer gripes about mobile banking.  25% of them express concerns with the channel, compared to 33% of Gen X and 35% of Boomers. What kinds of concerns? 28% grumble about “hidden fees,” while 53% complain about ease of use. 

The study uncovered valuable findings when it focused on abandonment issues – why do we just close out when midway into a task in a digital banking session?  36% said they did so because “the process [was] taking too long.”  20% complained about authentication “being too time consuming.” 

Waste a consumer’s time – and the consumer is the judge of this, not a cautious credit union manager – and they will blow you off.  Just that fast. 

Here’s the kick in the head: “One-third of consumers respond negatively to their FI after abandoning a mobile banking activity,” reported Jumio. Understand: 7% decided to open an account at another financial institution.  And 13% shared their grumble about the experience with family and friends. 

That’s word of mouth you don’t need. 

In this regard, the Javelin research shows that account opening tools must cater to Millennials, mainly because they are the leading cohort when it comes to adding new accounts and services. Their chief complaint: it takes too long.  The antidote: speed it up. 

And make it easy to complete the tasks on a mobile device. That is becoming a crucial battleground. 

When it comes to authentication, Millennials in particular prefer biometrics, especially eye scans and facial recognition, according to the Javelin data.  Farther down the list are legacy modes such as QR codes.  Very probably institutions that want to stay on the cutting edge of Millennial acceptance need to roll out multiple biometric modalities. 

Another, key piece of advice from the research is: “Put security first (and make sure your customers know it).”   

“But… weave security into the customer experience in smooth, fast, intuitive ways.” 

Don’t make security into hurdles members have to jump – how many routinely forget passwords? – but do let members know that security protocols are always there, always protecting them. They want that reassurance even if they don’t want the hassles of dealing with in your face security challenges (what street did your father live on at age 6?).   

Sift through the Javelin findings and there is much to cheer credit union leaders. There is no way they can compete with money center banks in terms of branches – but they don’t need to.  What a credit union needs is top grade digital experiences, online and mobile, that include easy account opening and build in seamless security that will protect members. 

None of that is easy. 

But it all is doable at credit unions that embrace the digital mandate. 

Rating the Mobile Banking Apps: How Do Credit Unions Fare? 

By Robert McGarvey 

For Credit Union 2.0  

 

The good news for credit unions in this year’s MagnifyMoney survey of mobile banking apps: Many do very, very well, even against money center bank competition. 

The bad news: Mobile banking apps, suggests MagnifyMoney, “have reached middle age.” That means, per MagnifyMoney, “overall, apps haven’t appreciably improved.” They have entered an era of complacency – and, listen up, that may well not be good enough. 

A point not in the MagnifyMoney survey is this: non banks keep buffing their apps, benchmarking themselves not against financial institutions but best in class apps such as Uber, Airbnb, Amazon, and Venmo.  Before patting yourself on the back with congratulations about the quality of your mobile banking app, ask yourself how you stack up against the really good consumer apps that many people spend hours daily using. 

Back to the MagnifyMoney data and the good news for credit unions: according to its survey, “in general, people still rate credit unions apps higher.  Probably unsurprising, as most CU users report a better experience in general. But traditional banks are catching up. 3 of the ten best overall apps are banks or direct banking apps. Last year all but 1 were CUs.” 

Not all is cheery news in the survey. Chew on this: of the 10 worst mobile banking apps, per MagnifyMoney, four are credit unions. On the dishonor roll are VyStar Credit Union, Patelco, Northwest Federal Credit Union, and Tinker Federal Credit Union. 

That means credit unions as a group can only get so giddy about their performance. Some appear to be in the same league as the worst banks. 

But credit unions do score high in the round up of most improved apps.  Among the top 10 are Teachers Federal Credit Union, CEFCU, America First Credit Union, Schoolsfirst, Alliant, and DFCU.  That’s six of ten. 

Among the top 10 most deteriorated apps are three credit unions: Desert Schools, Suncoast, and SECU of Maryland. 

As for the 10 best overall, credit unions on this honor roll include Eastman Credit Union, ESL, Redstone, SEFCU, Wright Patt, and Delta Community, Visions. 

The others in the top 10 are Discover, BBVA Compass, and Capital One. 

How reliable are these ratings? Probably not very but at least this is a start. The issue is that the MagnifyMoney ratings start by sorting out the 50 biggest banks and 50 biggest credit unions, then looking at user ratings for the apps in the two big apps stores (iOS and Android).  As far as that goes, it makes sense but let me ask: how many apps have you reviewed in the apps stores? 

Not many right. 

I scratch my head in trying to remember the last time I reviewed an app in an app store. And whatever it was it was because the app was just terrible.  Or I was angry for other reasons with the provider. 

So I’m unconvinced that app store ratings are the end-all when it comes to deciding the best and worst mobile banking apps. Nonetheless, my advice is to look hard at the top rated credit union apps – and by all means scroll through the actual user comments in the app stores. 

Do likewise for the worst rated. 

Now ask yourself the really hard question: what are we doing right now to keep our app fresh and relevant for a new generation of credit union members? 

What can we do? 

How can we press our vendors to really upgrade the app to help us better serve our membership? 

What do our members really want that they are not presently getting from the mobile app? Ask them if you don’t already know. 

There’s no rest for the weary. This just came in from Bank of America in an email blast to media about upgrades to its mobile banking app: “Express checking account application — With nearly one-quarter of all accounts opened digitally, Bank of America has introduced a new streamlined process for customers to apply for a checking account securely within the app. The enhanced, single-page design populates customer information into the application, simplifying the process.” 

Can you match that? 

What can you do to get there? 

What can you do to stay ready for the next wave of upgrades? 

The process just doesn’t end and, at many credit unions, there’s resistance to the idea that continuous improvement is a must with mobile apps. 

But give it up. Resistance is futile. With mobile banking, it has become improve or perish. 

Why MRDC Hasn’t Fulfilled Its Promise 

By Robert McGarvey 

For Credit Union 2.0

 

A new research report from Javelin on “Why Digital Banking Often Fails to Reduce Offline Volume” has an infographic that just popped my eyes. The subject: “Reasons Why Consumers Avoid Mobile Banking and Turn to the Branch or ATM for Check Deposits.” 

Javelin offers answers but, first, why do you think your members do this?  Especially when, in theory, nothing could be more convenient and simpler than using a smartphone at your kitchen table to deposit a check that came in the day’s mail. 

But lots and lots of consumers don’t use MRDC and even those who do, don’t always use it.  Why? The Javelin report explores that question. 

I can give you a hint about why. A few months ago I opened a new account at Arizona Central Credit Union.  I deposited a check for around $25,000, drawn on Capital One (closing an account), and I deposited it at a branch a few blocks from my apartment. 

Recently I opened the ACCU app to make a deposit and saw my MRDC limit is $500. I shut the app. 

I opened a Chase app, where my limit is many times that, and deposited the check. 

I’m not alone. 15% of the consumers who don’t use MRDC told Javelin they were afraid their check was too big. 

They’re probably right. 

Even Mitek, the principal MRDC cheerleader, in its 2017 Mobile Deposit Benchmark Report, moaned about this barrier to wider usage: “Deposit-limit policies at three quarters of FIs essentially represent penalties for customers who use mobile deposit, representing an unsustainable barrier to digital migration and growth….Many consumers state they have been prevented from using mobile deposit by the FI’s dollar limits, yet conversations with industry executives tell us that advanced risk management policies can enable customer-friendly deposit limits that also limit misuse.” 

Yep, and that’s been true for years. But still most credit unions retain absurdly conservative deposit limits. 

As for long holds – and I have personally seen holds as long as seven business days on a mobile deposit – there is no defensible reason for the practice, other than a desire to thwart MRDC usage. 

Could be that’s exactly what some credit unions want to do. Processing fees are involved with deposits via vendors such as Mitek. Force the consumer to walk the check in and there’s no Mitek fee. 

But maybe there also is no consumer, as the consumer does as I did and calls up a friendlier app such as Chase and makes the deposit. 

Note, too, Javelin said 17% of consumers who did not use MRDC said their reason was that “I needed the funds quickly.”  Long holds chase away members. 

Probably the biggest barrier to MRDC usage, per Mitek, is insecurity about the technology.  Reported Mitek: “Fear of fraud is the most powerful impediment to widespread mobile deposit[Text Wrapping Break]adoption, cited by 43% of non-users from large FIs. FIs must unequivocally assure customers that mobile deposit is every bit as secure as an ATM or bank branch. Immediate feedback and receipts upon deposit acceptance, and notification of funds availability will help resolve these fears. Walking customers step-by-step through their initial experience may also alleviate[Text Wrapping Break]worry, as fear over making a mistake is holding back 34% of non-users at large FIs.” 

According to Javelin, 14% of non users said: “I didn’t feel safe depositing a large check via the phone.” 

A last, huge obstacle to MRDC usage – fortunately seen at ever fewer financial institutions – is charging fees for MRDC. That never made sense and certainly doesn’t make good business sense today.  Reported Mitek: “In 2017, for the first time, none of the major banks reviewed charged a fee for standard processing of mobile deposits. Still, worries over fees remains a block to nearly one out of three FI customers. Therefore, marketing the costfree nature of mobile deposit is an imperative to boost channel migration.” 

Now, just maybe MRDC will never capture all deposits. Javelin research found that 27% of non users said they had to go to the branch for other reasons. 32% said they had to go to the ATM for other reasons (presumably withdrawing cash).  So they made their deposits through those channels. 

But there remains huge growth potential for MRDC if credit unions raise deposit limits, erase unnecessary holds, stop charging fees, and go on the offensive to assure consumers that MRDC is as safe as making a deposit at an ATM. 

That’s because, among those who do use MRDC, a consistent comment according to Mitek is praise for the “ease of use.” 

But there’s even hope for capturing non-users. Advised James Robert Lay, CEO of Digital Growth Institute who specifically addressed how to gain usage by those who so far are resisting MRDC: “What will increase mobile deposit use is credit union staff working with account holders that come into the branch to deposit checks. Hold account holder’s hands (and their phone) to guide them through the process. Heck, employees might find the account holder does not even have a credit union’s mobile app downloaded to their device.  

It’s a bit of a paradox but to increase digital product use requires human interaction and intervention as change is hard, even though the mobile deposit is easy.” 

So right. So smart. 

What’s Not In Your Members’ Mobile Wallets

By Robert McGarvey for Credit Union 2.0

Two stats jump out of a PSCU and Javelin report entitled “The Credit Union Guide to Opportunities in IoT, Biometrics and E-commerce.”  Credit union members love their smartphones -80.9% own one. That’s roughly comparable to big bank customers – 88.4% of them own a smartphone. 

Where credit union members falter however is in mobile wallet usage. 46.3% of big bank customers have used a mobile wallet – such as Apple Pay – in the past 90 days. But just 10.8% of credit union members have. 

In the past week 3.7% of members have used a mobile wallet. 19.3% of big bank customers have. 

Those stats have to scare you. Credit union members have smartphones. They just aren’t using them to pay. Big bank customers are 4x more likely to pay by phone. 

Why are credit union members so slow to adopt mobile wallets? It’s all the more puzzling when so many big retailers have embraced Apple Pay and that typically also means Android Pay and Samsung Pay too. It’s now easy to go a day without ever using plastic cards, from coffee in the a.m. at Starbucks using its app through stocking up on dinner groceries at Trader Joe’s or Whole Foods with Apple or Android Pay. 

But there just aren’t many inside credit unions. 

Mobile wallet adoption is also fueled by an increasing number of online and in app merchants that have begun to accept Apple Pay or PayPal. That means a wary consumer doesn’t have to input credit card info and for some of us it’s a plus to just pay with Apple Pay.  

PSCU and Javelin said that the relatively low credit union usage of mobile wallets compared to big bank customers leaves credit unions “vulnerable.” 

So it is worrisome that comparatively few credit union members use mobile wallets. 

Partly this anemic usage is because credit union members skew older and the demographics that have most jumped on mobile wallets are younger 

Another factor: few credit unions have actively marketed mobile wallets to their members. Initially, when Apple Pay debuted, as credit unions rolled out the tools they blew trumpets to announce they had the latest technology. But now many are silent. Plainly they would rather tout other products to their members, in part because mobile wallets such as Apple Pay cost a credit union money while many other products – such as a credit union’s own credit cards – make the institution money. 

That’s understandable but also short-sighted. Mobile wallets are the future of payments and an institution that plans to hang around needs to be at the forefront of surging consumer usage. 

Look again at how much more mobile wallet usage there is at the big banks. The disparity with credit unions is frightening. 

At least some big banks have further fueled mobile wallet usage by doling out perks to customers who use them. Chase for instance has promoted mobile wallet usage with a promotion that adds a bonus point for every dollar spent with mobile wallets on some credit cards.  

Wells Fargo also has offered sweeteners to mobile wallet users. 

What’s a credit union to do? Definitely, think about offering promotional bonuses to encourage usage. 

But there are free tactics too. Start by reminding members of the wallets supported by your institution. Make it easy for a member to find this out. DCU in Massachusetts does this well. Study its pages 

Navy Federal, the first credit union to offer Apple Pay, is another to study 

Then do as PSCU and Javelin advise: “The key challenge for credit unions will be persuading their members to load their mobile wallets with the credit union’s debit and credit cards instead of those from another banking institution.” 

How to get there? Ask – and keep asking. 

It’s not easy to get a member to change a credit card preference that has been entered into a mobile wallet. Many have a faint memory of what card is associated with Apple Pay. 

Ask and ask again.