The Dos and Don'ts of Mobile Banking

Credit unions are pouring money and resources into mobile these days, but budget pressures, constantly changing technology and big learning curves sometimes mean their platforms end up doing more harm than good.

It's no surprise, however, that many credit unions have scrambled to "just get something out there." In 2011, four out of five people didn't use mobile banking; now 35% do, according to a Federal Reserve study. People are also using mobile banking more often – 45% said they use it at least once a week, an increase of 37% since 2013, according to RateWatch. So not only is the mobile market getting bigger, it's getting more ingrained in members' day-to-day lives, and in turn, it's becoming the technology that could determine whether a credit union lives or dies.

But talk to some of the firms credit unions turn to for help fixing their existing mobile technology, and you'll hear stories of clunky design, botched attempts to build apps in-house and backfired efforts to pinch pennies. These gaffes can have big consequences, but they also point to seven dos and don'ts that experts say credit unions should consider carefully to make sure their mobile technology actually adds value.

DO integrate multiple functions into one mobile app.

Unfortunately, it's still common for credit unions to have multiple mobile apps – one for deposits and another for balance inquiries, according to Preston Packer, who is the director of sales and marketing for FLEX, a Utah-based firm that designs mobile apps for credit unions.

Separate apps is not a good idea, because it requires too much downloading and navigating to get things done, and it tends to create inconsistent experiences when members access things from different devices, according to Mark Vipond, CEO of D3 Banking in Omaha, Neb.

"You need to have a common capability across any digital device to access similar services with a consistent user experience, so that a user can move between devices and have the same experience and the same result no matter where they're coming from," he said.

Part of the problem is the app developers, Packer noted.

"The biggest challenge that faces credit unions today is finding a provider that can integrate or build in all of the components that a member expects to use as part of mobile banking," Packer said. "Nobody wants to use a separate app for remote deposit capture. Nobody wants to use a separate app for mobile lending."

Bill pay is another example: "If you [the vendor] don't have a bill pay solution, you're generally pushed out to a separate bill pay app," he explained.

Sometimes vendors can incorporate third-party services into a mobile app to make up for their lack of proprietary solutions. That way, the member never leaves the app to, say, view a bill, he said.

DON'T assume your mobile users are all millennials.

They may get all the attention, but mobile app design is increasingly focused on other demographics that are adopting mobile banking too, Packer said. Millennials aren't everything.

"They're not the strongest usage group of mobile, Packer explained. "That's actually the 35-to-44 age group."

However, millennials are the clear leader in mobile payments, he said. They feel the most comfortable using that part of the technology, and credit unions need to keep that in mind, he cautioned.

"We're not so much concerned as an organization, when it comes to development, about a demographic such as an age group," he said. "The expectation of a user, whether you're 18 or whether you're 65, typically tends to be the same."

DO know the difference between a mobile website and a mobile app.

This is a big issue, Packer said. Yes, it's possible to optimize a website to display on a mobile screen, put a virtual wrapper around that and put it in the app store, he said.

"But even though it's in the app store doesn't make it a true mobile app," he explained.

Members can't make mobile deposits with a mobile-displayed web page, for example. That requires access to the phone's camera in order to photograph checks; even a branch locator requires access to the phone's geo-location functions, Vipond explained.

Security is also a huge issue when credit unions try to tell themselves their mobile-optimized websites are apps, Packer added. That's because members inevitably end up on non-secure web pages instead of staying inside a dedicated, secure app, he said.

Read more: Don't do whatever's cheapest or put mobile in a corner …

DON'T put mobile in a corner.

"Having a discrete and separate mobile channel distinct from every other digital access in our opinion is wrong-headed," Vipond said. "We don't believe that you can delineate between mobile, online, wearables, smart cars, smart TVs – because these channels are going to proliferate, and if you talk about each of them individually and if you solve each of them individually, it's an unsustainable model relative to cost and complexity per credit union."

Credit unions that were too quick to jump on the mobile bandwagon and rolled out bad apps are now rethinking their digital strategy, he said.

"The concept of digital banking is more important than mobile banking at this point," he said. "The trend is to move to bring all these services together."

DO plan for what's next.

Mobile electronic signatures are one of several things still on the horizon for mobile banking, according to John Levy, who is an executive vice president at IMM and a director at the Electronic Signature & Records Association. More than 50% of signature transactions will be originated on a mobile device by 2020, according to ESRA, and allowing members to sign loan documents and other paperwork electronically with their phones speeds up document execution for everyone, he said.

"I've heard from a lot of consumers that some choose to still want to do business in a branch," he said. "When they go into the branch, maybe mobile turns into being able to sign those documents on an iPad."

Though convenience is the primary selling point, the fact that members don't need to come to a branch to sign things also helps credit unions attract and retain long-distance members, he said.

DON'T do whatever's cheapest.

Mobile is an asset, not just an expense, experts advised.

"The No. 1 reason why we see people come to us from that standpoint was they were trying to avoid costs," Packer said.

Credit unions routinely come to his firm hoping it can fix substandard apps from other developers or do-it-yourself experiments gone bad, he said.

Ballpark up-front costs for a decent app run from around $2,500 at CU Mobile to $5,000 at FLEX, but there can also be monthly maintenance fees, per-download fees, per-user fees and per-item fees as well. For example, mobile deposit can run $0.35 an item, though Hargis said he's seen firms charge $1 an item. And CU Mobile App's $250 monthly cost actually varies by asset size. Both firms each have more than 100 credit unions using their apps, they said. Packer said his firm's turnaround time for a mobile app is about six weeks. CU Mobile Apps, an app developer in Naperville, Ill., averages about 60 days, according to Managing Partner Rick Hargis.

DO lift a finger.

Is a bad app better than no app? Probably not, but credit unions do need to have mobile apps if they expect to remain viable.

"If a credit union doesn't have an app today, they're behind the mobile 8-ball," Hargis said. "If they don't have it by the end of 2016, they're three balls behind. If they don't have it by 2017, they need to put their merger letter out."

Mobile apps for credit unions come in all shapes and sizes, but here's what the experts said a decent app should offer: