MADISON, Wis. (1/3/14)--For credit unions, the biggest drivers of technology trends are not tech giants such as Apple and Google, but credit union members. Consumer acceptance--or better put, demand--has driven the almost ubiquitous presence of smartphones, tablets and their accompanying applications.
In financial services, consumers have driven the growth of mobile banking and virtual, anywhere, anytime service. For credit unions, that trend will continue in 2014, with technology and financial providers trying to meet consumer demands for convenience, mobility and customization.
A few of the technology trends that will shape the technological landscape in 2014 include:
- Strategic mobile services. After establishing a mobile banking presence in 2014, credit unions must take a more strategic approach, experts say. They must find ways to add value to member relationships, help differentiate the institution and create a strategic advantage, said Ron Shevlin of Aite Group. The increasing development of mobile applications that place financial institutions where their members and customers are making financial decisions will drive mobile banking's growth, according to Bank Innovation.
- "Omnichannel" financial services. For nearly 20 years, credit unions have developed digital touch points to provide more convenience for their members, and to drive down operational costs. But many members still show a strong preference for having convenient access to brick-and-mortar locations, especially when seeking out financial advice or performing more complex, emotionally involved transactions, (eMarketer Sept. 4). "An omnichannel approach--serving and engaging with [consumers] in an 'anytime, anywhere' fashion--is being touted as a way to give [financial institutions] of all types and sizes more flexibility to meet consumers' constantly evolving preferences," said an eMarketer report, "Digital Banking Trends: With Consumer Preferences in Flux, Is Omnichannel the Answer?"
- Repurposing the branch. The many options offered by the omnichannel will be accompanied by a repurposing of the branch, driven by self-service. "Whereever you go--the airport, Home Depot, Lowe's, the grocery store--basic transactions are being pushed toward self-service," said Robert Reh, chief information officer at Nassau Financial FCU, Westbury, N.J., and a member of the CUNA Technology Council's executive committee. "That trend will change the face of basic branch transactions in the next couple years." As basic transactions move towards automation, added-value services such as lending and financial advice will maintain the personal approach, Reh said.
Some credit unions have already begun rethinking their branches through technology. Vantage West CU recently opened a tellerless branch in Tucson, Ariz. The branch is largely driven by deposit-automation Opteva ATMs from Diebold Inc. In one of its branches, Coastal CU in Raleigh, N.C., has implemented personal teller machines (PTMs), a video-based technology that does everything a traditional teller would do--dispense cash, create images of checks and answer questions (News Now July 3).
- Cardless ATM transactions. Consumers will soon be able to make ATM transactions with their smartphones. Diebold and mobile wallet provider Paydiant have already created the technology. To complete a cardless withdrawal, the credit union members scans the ATM's QR code using a smartphone. When the devices sync via the cloud, a transaction screen appears on the smartphone, allowing the user to select the withdrawal amount. The cloud server then sends a one-time code to the smartphone, which the customer enters on the ATM screen to authenticate the transaction and receive cash.
- Digital wallets. In the 1990s, Paul Fiore started up Digital Insight, betting that credit union members would log on to credit union web sites and do their online banking through his company's online financial management software, rather than Microsoft Money or Quicken. Digital Insight became one of the largest providers of online financial providers in the credit union sector.
Now Fiore and his partners are betting that credit union members will reach for a credit union-branded digital wallet rather than one with one from Google or another big tech provider. The startup has already signed 39 credit unions representing 4.64 billion members and 54 billion in assets. As CUWallet begins to create scale it will focus on signing more merchants, Fiore said. "Credit unions are betting on themselves," Fiore said. "We will soon see the day when we represent 10 million members."
- Big data. In the upcoming year, organizations that are able to define which datasets will have the most impact on crafting a great consumer experience will succeed have a competitive edge. "We have a wealth of information available to us, Reh said. " Most credit unions have a marketing customer information system. Many have [customer relationship management system]. They certainly have core system. We need to utilize that information with our member to make them offers that they might not even realize the need." Social media provides a vehicle to provide even more highly targeted messages, Reh said.