Banking as we know it will never be the same. Remember a time when you had to visit a brick and mortar credit union branch to deposit a check or to inquire about recent account activity? I do. Now I can perform those functions and so much more using my smartphone. Maybe we all just got really old, really fast; or, financial services have undergone a transformational shift.
I side with the latter — although that doesn't make me feel any younger.
What we're witnessing is how the world's thirst for convenience has changed the way we interact with money. By today's standards mobile service offerings are an expectation of members. Still, it is difficult to imagine a world where branches become completely obsolete.
Past research by Filene has shown that high-value interactions will always have some face-to-face component — even for Gen-Yers. But to this 25-year-old with my iPhone glued firmly to my hand, branches might as well be considered good as gone.
According to Filene's recent report, Emerging Payments and Communities: Reimagining Trust and Mutual Finance, 62% of users 18-24 years old have at least tried mobile banking, and a vast majority (90%) use online banking. Millennials' attitudes and behaviors are signaling a desire to steer away from traditional banking channels.
At the heart of this change is the evolution of payments. Day-to-day transactions are the best signal for primary financial institution status. In the same report, it's revealed that mobile payment transactions are expected to total nearly $60 billion by the end of 2017.
Mobile payments are gradually picking up steam, given momentum by Apple Pay and terminal upgrades at the point of sale. Aside from the ability to pay for goods and services, mobile payments create opportunities for: Discounts/coupons based on usage of mobile device, elimination of checkout thanks to mobile scanning technologies, and tracking of spending habits.
Mobile payment transactions are expected to exceed $60 billion by 2017. This presents an opportunity for credit unions to enhance mobile payment offerings.
Non-traditional tech companies and other start-ups are on the forefront of this mobile revolution and that doesn't bode well for credit unions that choose to sit idle and watch. In fact, a recent survey of various key demographics revealed that 77% of 18-34 year olds, 58% of 35-54 year olds and 28% of 55+ year olds are likely to bank with at least one non-financial services company in their lifetime.
Ultimately, credit unions need to enhance mobile offerings by investing in technological tools members will find useful. To read more about the ways in which credit unions can optimize mobile offerings download the following Filene reports:
Manpreet Nat is a research associate at Filene Research Institute. He can be reached at 608-661-3752 or [email protected].
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