Fintech is coming hard after payments and just about every other primary banking function, pitting credit unions and other financial institutions against a growing list of well-funded startups. The technologies those startups are building are transforming how credit unions compete, so CU Times asked a few experts what payments products, services and processes they thought credit unions must have today to stay relevant. Here's what they said.
1. A mobile wallet. “I think mobile wallet is absolutely going to be essential,” Chuck Fagan, president/CEO of the St. Petersburg, Fla.-based CUSO PSCU, said.
The high level of trust consumers have in credit unions creates a big opportunity today given the exploding but disjointed nature of the mobile wallet sector right now, he said.
2. P2P capability. Justin Benson, CEO of payments software firm Spreedly, said credit unions should focus on peer-to-peer payments offerings as much if not more than mobile wallets.
“That might be the wedge that gets people used to using your mobile wallet,” he explained. “Once they're comfortable paying their friends, their rent or sharing dinner, it's a logical extension to start paying in store. And then we can monetize.”
3. A rewards program. The Durbin Amendment's cap on debit interchange fees was a death knell for many debit rewards programs, but they're still effective for many credit unions.
“Rewards continues to be one of those things that consumers are looking for when they align with a card,” Fagan said.
Cash-back rewards are especially appealing to younger members; older members like merchandise and travel rewards, he added.
4. Alerts. “Alerts have been statistically shown to reduce fraud dollars by about 40%,” Fagan said. “There are newer technologies coming out that we all need to stay on top of. Visa, I know, and MasterCard are working on programs that align your cell phone with the proximity of your card. We need to be on the front end of those.”
5. Smoother remittance compliance. Foreign exchange is one of the fastest-growing markets in the world, and remittances are a major part of that market. Investing in technology that can help credit unions adapt to regulatory changes in that area is key, Mike Ward, CEO for international payments firm World First, said.
“Their ability to not have to walk into a branch and sit down for half an hour and fill out forms is changing. There's quite a high-end user experience to that,” he added.
6. A dedicated human. “If you think about the importance of interchange and interest income and all of that stuff that comes off the card programs, having somebody own it makes a lot of sense,” Fagan said.
“If you sit on the sidelines too long, then you're not going to be able to catch up,” he said.
Read more about these six strategies in the April 20, 2016 print issue of Credit Union Times.
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