Bluepoint Solutions

With IT budgets up in 2011, mobile banking and mobile RDC have emerged as two of the major new technology investments for credit unions this year. Credit unions — historically the technology leaders in financial services — have been generally slow to implement sophisticated mobile banking and RDC solutions. As of June 30, 2010, only 44% of credit unions in the US with assets over $1 billion offered mobile banking to their members. For credit unions with assets between $500 million and $1 billion, the number drops to 33% and continues to drop in credit unions of smaller asset sizes. (Callahan and Associates)

1. All the big guys have it.

The four largest banks in the country — Bank of America, Chase, Citibank and Wells Fargo — have deployed sophisticated mobile banking applications. Chase, USAA and PayPal currently offer mobile RDC functionality. Since launching its mobile RDC service on the iPhone in 2009, USAA customers deposited 2.6 million checks totaling $1.6 billion by the end of 2010. Meanwhile, PayPal received more than $1 million in deposits in its first month of offering the service. (American Banker) The early adopters have proven the viability of a comprehensive mobile banking channel. Now it is up to the rest of the industry to follow suit.

2. Smartphones are now the standard.

Smartphones are currently in use by 34% of adults in the United States (US), totaling 59 million. In 2011, smartphones will outsell regular mobile phones. Google’s Android OS, Apple’s iOS and Research In Motion’s BlackBerry will account for 80% of the operating systems on smartphones shipped in the US in 2011. By 2015, 68% of adults in the US, totaling138 million, will own a smartphone. (Javelin) Banking on a smartphone allows the user to do more than check balances and transfer funds. Mobile bill pay, person-to-person payments (p2p) and mobile check deposit are among the newest features that are catching on among users. Additionally, the market is already showing signs of differentiation between first generation applications and the more recent, feature-rich applications.

3. It’s all about the Apps.

By the time you read this sentence, Apple iOS users will have downloaded about 2,000 apps. That’s 206 apps per second to the tune of over 10 billion total apps since the iPhone was launched. (Apple) With 19% of US adults, totaling 36 million, currently using mobile banking applications, financial institutions have the ability to project their branding and services to the most frequently used and most important technology-driven device in their members’ lives. (Javelin) Doing so through a downloaded application is the best way to control that experience by customizing the various screens, functionality, and communications received by the user — especially when compared to the limitations imposed by Mobile Web and Text Message applications.

4. Triple play, triple threat.

Downloaded apps might be the fastest growing segment of mobile banking, but it is not the only way users can do their banking. Mobile web, also known as WAP, is still popular for users who aren’t on a major smartphone platform, while SMS text messaging is still a convenient way to check balances and transfer funds instantaneously. Just add these three together and you’ve got a triple play. The best strategy for mobile banking providers is to offer a combination of mobile banking options on all of the smartphone platforms, mobile web and SMS. You can bet that you’ll need to offer all three to satisfy a wide-range of preferences from your members.

5. What do the youth and the affluent have in common?

20% of adults who regularly use mobile banking applications are under age 24 and typically in college. Often, this is the exact market segment that credit unions find most difficult to reach with traditional marketing tactics. Both the average balance and the average net worth of the typical mobile banking user are significantly higher than those who don€™t engage in mobile banking. (Nielsen) This means that a smart credit union can use a smart mobile banking strategy to attract new members in both the hard-to-reach age younger demographic and a wealthier demographic.

6. Mobile RDC has people talking.

Mobile banking might not be universal (yet), but it also isn’t new. In order to differentiate your institution from competitors, your mobile banking application will need to offer the latest services. The newest is mobile check deposit. First launched on a mass scale by Chase in July of 2010, the market has reacted with building consumer awareness of the ability to deposit checks with a smartphone. This widespread and main-stream visibility is further bolstered by PayPal’s launch and promotion of mobile RDC in October of 2010. Mobile RDC gives credit unions the ability to capture a greater amount of deposits and reduce branch traffic, while improving member service. The addition of mobile check deposit functionality to a robust mobile banking solution creates an on-the-go branch for members. This means members can access their accounts and perform a growing variety of transactions at their convenience.

All the available data is pointing to a surge of mobile banking in 2011. As consumers continue to grow more accustomed to banking on their smartphone, other services such as RDC, p2p payments, and personal financial management are bound to gain popularity. Credit unions have a window of opportunity to leverage these technologies to differentiate themselves from their counterparts and grow their membership.