Use Mobile to Deliver Value

Mobile matters. But embracing mobile can't just be a matter of trying to copy the big players. Sure, credit unions need to deliver a "table stakes" level of mobile – ideally, through cost-effective collaboration – but they also need ways to use mobile to leverage credit union strengths and address member needs. Then, the system will make a real difference in members' financial health and help ensure its own.

The root of any effective mobile initiative is to first identify a clear objective. The most successful credit unions utilize mobile as a means to deliver on their value proposition. Credit unions should ask themselves whether they're helping members deal with the issues that impact their quality of life in critical areas, such as:

• Poverty

• Student loan debt

• Life cycle challenges (i.e. first home, first car, retirement planning, etc.)

• Unbanked or underbanked challenges

• Dependency on alternative financial services (such as payday lenders)

Once the mobile objective is identified, it becomes easier to develop a platform or suite of tools members will find beneficial. For example, millennials are more reliant than ever on technology to interact with their financial institutions. In fact, a recent Filene report revealed millennials are 72% more likely to transact with their bank through mobile apps than other age groups. If Gen Y is the target demographic for your credit union, building mobile tools to address Gen Y-specific challenges such as saving money or student debt is the practical investment to make.

Silicon Valley is already displacing financial institutions. There is a huge range of mobile- and web-based tools for financial management, and millennials don't necessarily see a need for banks – they're happy to work with anyone who can give them effective banking.

Mint is a popular app that allows users to consolidate accounts, track expenditures and establish personal finance goals. Another well-received app is Acorn, which automatically rounds the user's purchase to the nearest dollar and invests the difference in a portfolio of choice. Other apps such as Level Money monitor recurring bills and suggest daily, weekly and monthly spending limits.

Credit unions can mirror these apps by introducing tools that keep young adults engaged and more in control of their finances. Anything that reduces friction but increases value for members is worth considering.

Designing the Ideal App

Credit unions can't go head-to-head with banks' technology spending, but they can build more wisely. The average bank has much deeper technology pockets than the average credit union. That doesn't give credit unions a free pass on technology – a certain level of offerings is table stakes – but it does mean credit unions should use technology to leverage their face-to-face, service-first reputation and work together to avoid losing members because they aren't meeting minimum mobile requirements.

A mobile app is becoming standard practice in today's industry. However, what are the parameters of creating the ideal app and what considerations should credit unions keep in mind? Filene analysis pinpoints the following as important components of mobile app development:

Build an API: API, or application programming interface, transfers data and connects the core system with card processing, bill pay and all the other critical tasks that the system needs to complete. By separating these tasks, a credit union can keep the things that members get to see and experience nimble and responsive, without worrying about "breaking" the underlying system.

Keep the front end in-house: It's vital for the credit union staff to have access to the source code throughout the project and to play an active role in the development process rather than handing off everything to a third-party vendor.

Collaborate: Credit unions should focus on large-scale collaborative efforts to build online and mobile banking platforms with one another. This creates the possibility of industry-wide standardization.

The most critical piece of mobile app development is ensuring 24/7 accessibility. The last thing members want to deal with is technical issues or barriers. You would much rather lose a member to a competitor over a product rather than a technical snafu on your mobile app.

The ultimate value of the mobile credit union app is data integration. With the push of a few buttons, members have real-time access to a central repository of data. Moreover, this gives members a better understanding of their financial position. The world is approaching a point where real-time data access is a must – for both the end user and host party.

BlueShore Financial, based in Vancouver, Canada, is using its member-generated data to identify the financial profile of its ideal member. Today, nearly 85% of BlueShore's 40,000 clients have been identified as its target audience. For credit unions, mobile apps can be a powerful method of maintaining connectivity with members.

Manpreet Nat is a research associate for Filene Research Institute. He can be reached at 608-661-3752 or [email protected].