The day the world changed: January 9, 2007. Those that work at a credit union may think back ten years to remember what was happening in the financial services world at the start of 2007. Was this the date when the first large bank collapsed? Was it the passage of new key financial legislation? Something going on with interest rates? None of those things align to that particular date – although it’s important to note that all of those were important trends that were happening around the same time.
January 9, 2007 was the day that Steve Jobs announced the original iPhone.
In an infamous product launch speech, Steve Jobs said that Apple Computer was announcing three revolutionary new products on that day. First, it was launching a widescreen iPod with touch controls. Second, Apple was also launching a breakthrough mobile phone – and there was a ton of cheering in the room for the phone. And finally, it was launching a breakthrough internet communicator. Again, everyone cheered ecstatically. Masterfully, Jobs then teased the audience about how these three ‘different’ products could be combined, and ended with the brilliant punchline that these three products were actually just one single device. This legendary example of Jobs’ showmanship can be seen in this video.
But nobody – not even Steve Jobs – could have predicted the impact that this trifecta device would have. Furthermore, most people would not have guessed that the third product – the ‘internet communicator’ – would end up being the most transformative part of the device. But it did.
Now – ten years later – the iPhone is not really used as much of a phone. And while important, the ability to play music or videos is a secondary benefit to the iPhone. Its killer app is that it is a powerful mini supercomputer that you can fit in your purse or pants (and, well, it also happens to make phone calls). And when you combine the power of the internet with the convenience of accessing the sum of all human knowledge in the palm of your hand, that is going to continue be a big deal. Is this the understatement of the year?
With access to a smartphone, Credit Union members now practically have an entire branch of a Credit Union in their pocket too. With check depositing capability, the ability to check balances and transfer money, the consumer’s need to step into a branch is a fraction of what it used to be. That is about as disruptive as it comes.
But looking back over the last ten years, there is another critical undercurrent too that needs to be noted.
With the financial collapse (also starting in 2007), consumers’ distrust of the banking industry skyrocketed. Consumers no longer trusted the ‘experts’ at credit unions to tell them what to do or how to bank. Consumers and members wanted to be empowered to make their own informed decisions around personal finance. While it is true that information on the internet existed before the iPhone, the convenience and ubiquity of the device itself – the ability to check out snippets of information while on the go – meant that you were also only a few finger taps from getting the information you need at any time.
As a consumer, you no longer would dare walk into a situation without having at least some information. Now, you can easily pull out your phone on the way to the Credit Union (or the doctor’s office, car mechanic, or department store) and research your options, see feedback from others, and become informed and empowered, before talking to any expert. Why would you approach any decision without being informed?
Today’s consumer now expects to ‘know before you go’ in almost any situation. Your members are using their phones to research information and advice on personal finance. Are you providing them what they need?
Now – let’s jump to Fall 2017. There are tons of rumors about the new iPhone that is coming, and at the time of this writing, some of this is pure frenzy and speculation. But it is clear that one feature – peer-to-peer payments as part of the update to the phone’s operating system – seems a safe bet to actually launch.
Peer-to-peer payments from Apple will again change the game. Yes – there are other peer-to-peer solutions out there. And online bill pay certainly can be used for personal transactions in a similar peer-to-peer way. But given Apple’s market penetration, and often elegant execution of user experience, this is going to be different. The most important feature of the iPhone – its convenience and ubiquity – will make the Apple peer-to-peer solution something truly impactful. The use of cash has been declining for years, but this will be at least one of the final ‘nails in the cash coffin.’ Online sites like Craigslist will be rid of one of the most vexing parts of buying goods from another person – getting cash for a secured transaction. Parents will also be able to pay their children’s allowance with the tap of two phones. Restaurants will no longer need to split since groups can easily settle up between themselves. Electronic payments are now truly liquid.
So get ready. Peer-to-peer payments could rival the credit card as far as changing your Members’ spending habits. The next wave of innovation is about to happen. Learn more about how credit unions can optimize their mobile strategy to reach target consumer segments by downloading our white paper.