Welcome to episode 39 of the CU 2.0 Podcast. Today is all about the future of Credit Union digital banking.
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.
By Robert McGarvey
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.