When credit union CEOs project their top technology priorities for the coming year, the word “mobile” is a key theme in the conversation, along with the goal of meeting member needs.
All things mobile
From branches to the member interface to the automated clearinghouse (ACH) system, mobile access is expanding, says Patty Campbell,president/CEO of Christian Financial Credit Union, Roseville, Mich. “We want to bring mobile-optimized solutions to our website, contact center, branches—all those channels,” she says. “It’s what members desire and deserve.
“Moving money from place to place is a big part of our business, and we’re moving off the slow rails—checks, ACH, wire transfers—to quicker ones that move money faster.”
During the past three years, the $262 million asset credit union has built a system of dashboards to monitor members’ comprehensive financial relationships. “We aggregate data from our core system and other systems, the credit bureaus, and other entities, in one database,” says Campbell.
“So whatever channel members use, our employees can see their complete financial relationship with us and we have a good idea of their relationships with others,” she continues. If members go to an ATM, for instance, the credit union offers the best product for them based on what it knows about them. “In 2013, we plan to involve consumers,” she says.
Longer-term, Campbell is concerned about the future of traditional service-delivery channels. “Because of the current diffusion in technology adoption, more nontraditional competitors have entered the arena,” she says, adding that many of them want to be in the payments space.
“If you own the transaction, you price it,” and nontraditional competitors know that, she says. “Banking isn’t going away, but there’s a real threat consumers won’t need traditional financial institutions to meet those needs. There’s rapid change happening, and there’s no sign it will slow or reverse. We must adapt to remain relevant participants.”
That’s why it’s critical to move away from core, often legacy, systems and to integrate with 2.0 technologies, she adds. “We’re moving to platforms that allow us to serve members in ways they want and expect.”
Christian Financial wants to eliminate most branch visits, except for complex needs requiring experienced professional guidance. An example is when members must make life-changing decisions, such as what to do with their pensions when they retire.
The credit union’s technology spending has increased during the past 10 years, and Campbell sees that continuing. “First, we’ll advance the ways members can use us,” she says. “Second, we’ll continue to improve security.
“As new technologies emerge, criminals will attack them. Security solutions are expensive, but it’s essential to protect members’ financial information.”
Smartphones and tablets
San Francisco Federal Credit Union recently rolled out a new website, an online banking system, and a mobile banking platform with Geezeo—a personal financial management tool. “It can aggregate information from different financial institutions onto one site,” says Steven Stapp, president/CEO of the $815 million asset credit union.
“Members can develop budgets and manage their financial goals in one place,” he explains. “The program has financial education tools and tips, and people can see real-time information on their computers or mobile devices.”
The credit union’s strategy is to implement two or three technology solutions simultaneously, and to reprioritize about every six months.
“Some companies set technology strategies and follow them, but technology is constantly changing,” says Stapp. “Our strategy keeps us propelled into the future and responsive to member needs.”
Smartphones and tablets will be members’ primary communication tools in the coming years, he says. “About 65% of young people use those devices, and if they’re not connecting to you that way, they’ll connect to a big bank. We’re in the hub of San Francisco, where technology lives and breathes—people are constantly connected.”
Mobile channels and applications also bring operating efficiencies that allow continued growth. “That’s an area of focus for us,” says Stapp. “Operational efficiencies are key to providing the service members expect, and to keeping costs down so we can provide value. Members want the value proposition returned to them.”
San Francisco Federal’s technology spending has increased about 50% in recent years, although Stapp says the credit union has become creative to keep budgets under control. “About 30% of members use electronic channels,” he says, “so we spend on technology—to keep our ‘e-branch’ up and allocate human resources to monitor e-channels—rather than on physical branches.”
For the future, he’s most excited about smartphone chips that can analyze people’s shopping habits and give them targeted offers. “Technology is advancing so quickly, and there are some great innovations coming,” he says.
NEXT: Return value to members
Efficiency, with a goal of increasing member value, drives many strategies at $1 billion asset Fort Knox Federal Credit Union, Radcliff, Ky., says Bill Rissel, president/CEO.
“We weren’t the first out with mobile banking,” he says. “We evaluate technology to make sure it fits with the credit union’s efficiency priorities and whether it works for the entire membership.”
For the coming year, one priority is to find ways to increase branch hours and service, without increasing costs. “We’ll push video to our branch drive-ups. We can batch the entire drive-up process in one location without affecting the existing member experience,” says Ray Springsteen, senior vice president.
“We’ll eventually have 14 branches open extended hours through the drive-up, with only three or four staff working. And members will still see employees on video,” he explains. “The extended hours will be a huge value to members, without much additional cost to the credit union.”
Fort Knox Federal offers mobile technology on a limited scale, with a large-scale rollout planned by year’s end. “We wanted to understand how members would use the channel, and it’s a little different than we expected, with extremely high use of text banking,” Springsteen says. “We want to make the channel easier for members to use and to ensure it’s efficient for the credit union.”
Long-term, Rissel envisions more integrated service across all channels. “In 2012, we made a big investment in our call center technology. We need a more effective way to manage member relationships remotely.”
He also foresees more nontraditional payment methods. “The process will continue to shake out, and we want to be sure we’re a player in members’ payments, and are top of mind for them in the mobile channel.”
A heavier regulatory burden forced the credit union to increase technology spending on compliance. To comply with the overdraft-protection opt-in requirement, for example, the credit union pushed electronic alerts and statements instead of paper, along with “swipe and sign” rather than “swipe and PIN” debit card transactions.
“PIN-based transactions cost about double for now, so we charge $1 when members opt to do ‘swipe and PIN’ transactions,” Springsteen says.
The focus on efficiency while investing in technology is paying off. The credit union’s expense-to-asset ratio is in the top tier for credit unions, at about 2.4%, Rissel says. “Technology allows us to be more efficient and to create incredible value to give back to members.”