The importance of remote banking was not widely understood or accepted in 2008. In just five years, however, the way members interact with their financial institutions has changed as evolving technology has ushered in a new era for financial services.
The proliferation of electronic delivery channels and services such as e-statements, mobile banking, and remote deposit capture has reduced credit unions' dependence on brick-and-mortar branches. Today's members do not have to enter a physical branch to conduct simple banking transactions because they have access to a plethora of physical, online, and mobile delivery channels.
In the fourth quarter of 2012, 57% of all credit unions reported offering e-statements and online bill pay. For credit unions with $20 million or more in assets, the number of credit unions offering e-statements and online bill pay jumped to 85% and 90%, respectively. More than 27% of credit unions offered mobile banking as of fourth quarter 2012. Nearly half or 49% of credit unions with more than $20 million in assets offered mobile banking. More than 7% of all credit unions in fourth quarter 2012 allowed members to deposit checks through remote deposit capture. That number doubled to 14% for credit unions with more than $20 million in assets.
Mobile Momentum
In terms of potential, mobile banking has not only the most support from credit union leaders but also the most momentum from consumer usage. According to Callahan & Associates' latest Technology Priorities Survey, credit union leaders identify mobile, defined as anything from remote account access to transaction processing, as their biggest initiative for 2013. Forty-four percent of survey respondents reported that they plan to upgrade an existing mobile banking application; 56% plan to introduce a new one for 2013. Respondents are also looking at mobile SMS and mobile browser optimized sites as well as mobile bill pay, peer-to-peer payments, and remote deposit capture. In the survey, 64% of credit unions reported that they plan to add a mobile RDC platform in 2013.
Regarding consumer usage trends, 29% of cell phone owners use their phones for some form of online banking, according to a September 2012 study conducted by Pew Research. The same study also indicates that 45% of all cell phone owners use a smartphone. That's a 10 percentage point jump from two years ago.
Balance Sheet Benefits
Mobile services allow accredit unions to compete with national banks and offer benefits on the balance sheet as well. Credit unions that offer mobile banking reported average loan balances in the fourth quarter of 2012 that were 9% higher than credit unions that do not offer mobile banking. They also reported average share account balances that were 17% higher than credit unions that do not offer mobile banking.
A Step toward PFI
Remote delivery channels help credit unions build wallet share. Remote services can manage rudimentary tasks and transactions while employees assist members in a more value-added fashion. As of December 2012, credit unions that did not offer mobile banking or RDC had 2.16 accounts per member. That number jumped to 2.54 accounts per member for credit unions that do offer both mobile banking and RDC.
The proliferation of remote delivery channels and services has reduced credit unions' dependence on physical branches. Moreover, they have allowed credit unions to meet members' needs through the channels and services they prefer, whether physical, online, or mobile, which drastically enhances the value of the credit union.
Parth Kapoor is an industry analyst with Callahan & Associates Inc.
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