A revolution is brewing in the payments industry. The future of payments technology is now in the hands of consumers in the form of their mobile devices and smart phones.
The growth of mobile devices that support Internet access and a rich set of applications have changed the way people communicate. These same devices are now poised to transform the way consumers handle their financial services as well. This rapidly evolving payments world necessitates that credit unions embrace emerging new technologies into order to retain members.
Bank Transfer Day cast a national spotlight on the unique cooperative structure offered by credit unions and their consumer-friendly practices as an alternative to big banks. This sets the stage for credit unions to gain membership and revenues but only if they offer consumers the payments options they desire.
Maximizing the revenue generated by credit and debit transactions is essential to the survival of every credit union. Statistics within our cooperative indicate that on average credit cards account for only 20% of the loan portfolio, but generate 75% of interest income. Credit and debit cards also help maintain stronger member relationships, which enables the credit union to cross sell other services.
No matter what type of payment method is being used, mobile technology will be the driving force for the future because consumers are exhibiting an increasing appetite to use their mobile devices to conduct almost every financial transaction. The future of credit unions rests on the ability to offer current mobile tools and technologies to members. This is why we are focused on our role to develop and deliver new technologies that equip credit unions to effectively compete with major banks and non-traditional players like Google and Apple.
Today, consumers can perform limited banking functions from their mobile devices. Current triple play technology delivers financial applications via two-way SMS text, mobile Web browser and device-specific applications that support Blackberry, iPhone and Android mobile phones.
By the end of the year, however, it's likely that most users of mobile and smart phones may be able to access a holistic wallet of versatile applications with a single log-on. This new mobile wallet is a quantum leap forward that will satisfy users' demand to securely perform financial transactions anywhere, anytime.
Future development of mobile applications will expand beyond the silo approach to merge banking, commerce and payment functionality – all from a single platform and single user interface. Consumers will gain exceptional flexibility and convenience with a single log on, a comprehensive view of their accounts and an intuitive, easy-to-use interface and presentation.
This technology leap is daunting but lucrative enough to attract the research and development efforts of powerhouses such as Google, Apple, Visa, MasterCard and others. It's important for credit unions to embrace current mobile banking applications to establish a foothold and address member demand.
Future mobile wallet platforms are expected to include access to all of a member's accounts, online bill payment, remote deposit capture, person2person payments, point-of-sale payments and e-commerce tools such as couponing and gifting.
Creating a platform that offers convenient, consolidated consumer access to financial data will require advanced processes for user authentication and security.
Maintaining a status quo approach to financial services is a losing proposition for credit unions. Mobile banking is quickly becoming a deal breaker for consumers, and credit unions need to get into the game.
A consolidated platform not only delivers convenience for consumers, it delivers exclusivity for primary financial institutions. Make no mistake – mobile banking is a winner-take-all product.
Michael Kelly is president/CEO of PSCU Financial Services.
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