The non-traditional bank
The credit unions have always been fighting “the good fight” for members. Providing a viable online and mobile solution has been the recent focus for most FI’s fighting to compete. These credit unions are competing against the Chases and Bank of Americas of the world. Some of these FI’s don’t have the annual budget that these large guys have in one month. But there is a bigger fish out there that both the credit unions and big FI’s should be worried about. An article by Lingjiao Mo on the Medill Report stated “Silicon Valley’s tech titans are waging a war against traditional Wall Street bankers.” The article outlines the move companies like Facebook and Google are making to position themselves to get into the $60 billion worth of mobile payments (by 2017). These technology titans have the budgets and the users to create a first class user experience and completely disrupt the way all of us view mobile banking and mobile payments. But can they focus enough to maintain what the banks and credit unions already know about this market? I think the bigger question is, what are the credit unions doing to make sure that doesn’t happen?
Recently Accenture released The Digital Disruption in Banking and outlined how consumers feel about digital banking, branchless banking, and their relationship with their bank. It is interesting to say the very least. I think the most staggering point of data was around how likely a customer would be to use a non-traditional bank. 50% of the respondents said they would use Square if they offered banking service. One out of every three people said they would bank with Google, Amazon, Apple, T-Mobile, Costco, and PayPal if services were offered. I don’t know about you, but this was very surprising to me. I guess I believed in the traditional bank model as an institution and a staple of our culture. Not just something Apple or Google could throw together and everyone would bank there. But then I started to think realistically. I pay all of my Starbucks on my iPhone and never looked back. If there was an iBank app in the app store, I would download it and try it out. I would want to know if it offered something different than I get with my normal banking experience. Even worse, I would move money into the account to try. So, at the heart of it, am I really any different than the people that responded to this survey? The answer is yes, I am different. I represent financial technology for our banks and credit unions and I don’t believe they become obsolete when a tech giant decides they want to swim in our pool. So, going back to my previous question, what are credit unions doing to maintain their member share?
The Accenture article outlines a plan of attack. I won’t spoil the article for anyone or plagiarize the good work done by the Accenture team… but they are right. Credit unions need to swiftly analyze the technology in the market today and how they are spending their technology budget. There has never been a time in financial technology history where there are more affordable and tech savy companies fighting for their business. There are some many great mobile platforms, PFM providers, and internet banking solutions providing all of the above. What is your mobile strategy? Are you looking past balance accuracy and more into why people would bank from their phone and tablet? Are you effectively marketing to those customers based upon the information you have at your fingertips? Also, there is the opportunity to look at best of breed inside those solutions. Who is your RDC provider? Are they a good fit to integrate into your mobile platform of choice? Do they provide a commercial/small business option? What about bill pay? If Google and Apple are getting in this arena for $60B in mobile payments, why aren’t you? You can’t limit the range of services you are offering your customers. Everything they cannot do within your applications… they will find elsewhere.
If our members… our credit unions aren’t looking over their shoulder, they should be. 2017 is 30 months away and everything is going mobile. The next generation of customers, along with THIS generation of customers are here with demands. And the functionality they are looking for is out there or is currently being built. It is not your responsibility to go out and find the right partner and provider to give these customers and maintain the long, proud, and strong tradition our financial institutions hold in this country. I know I personally hope you do…