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CUs' Mobile Banking Enters Second Generation: Special Report
MADISON, Wis. (2/20/13)--Mobile banking is here to stay at credit unions. Today, about one-third of all credit unions offer mobile banking. The rest are likely to roll it out within the next 48 months. By comparison, online banking took about twice as long to reach similar numbers.

So says Robb Gaynor, chief product officer of Malauzai Software Inc., a provider of mobile banking applications for community financial institutions, including credit unions, for News Now's special report.

Rob Kimmett, senior vice president of marketing for the Massachusetts Credit Union League and its subsidiary, New England Credit Union Services, discussed the ascendance of the mobile channel in a recent blog post on the league's website.

"Credit unions need to think of the smart phone as an intrinsic part of their checking/debit product," Kimmett wrote. "Someday in the very near future  ... the phone will be the payment device. But for now it is still a part of the product because it manages the account. It is in the member's pocket or bag and the check book and register are collecting dust at home."

Mobile banking is already moving beyond providing members with the ability to make basic transactions to a second generation that includes account management, member engagement and lending functions.

Malauzai will focus on three growth areas in mobile banking during the next six to 12 months:

  • Tablet applications. Malauzai's first client to roll out a mobile banking application for iPad had enlisted 20% of its membership for the application within five days, Gaynor said. "A lot of people have iPads out there, and they love to use them," he added.
  • Smart phone cameras. As many as 25% of members who enroll in mobile banking use remote deposit capture when it is offered, Gaynor said. Malauzai also has rolled out Picture Pay, through which credit union members take a photo of a bill statement, confirm the amount to be paid and submit the payment to the credit union digitally. "The camera is going to shine this year," Gaynor said.
  • Mobile employees. Increasingly credit union employees will employ mobile apps internally to enlist new members and perform teller transactions, Gaynor said. Supervisors will also use mobile apps to perform the "override" function required on many teller transactions.
First Financial CU, Chicago, offers loan applications through a mobile application from CU Mobile Apps, a subsidiary of Member Service Corp. Members can view and sign their documents using their smart phones. About 1,000 members downloaded the app within 30 days of its roll out, Patrick Basler, president/CEO of the $60 million credit union told News Now. The credit union approved 67 mobile applications during a personal loan special the week of Black Friday.

"The reason I emphasize mobile technology is because it allows a small shop like mine to compete with the Bank of America and Wells Fargo," Basler said. "Mobile levels the playing field for credit unions."

Credit unions also are beginning to employ the mobile channel to market to their members. Members receive targeted advertisements and can click through to learn more about offers. These ads can have a click-through rate as high as 10% to 12%, Gaynor said.

The reason for that high rate is obvious for anyone who has sat in an airport or coffee shop and saw the high percentage of people with their eyes glued to their phones, said Rick Hargis, president/CEO of Member Service Corp.

"This is the single best opportunity in my lifetime to reach the member," Hargis said. "They have got to see that message. And the credit unions have the advantage of working from a position of trust with their members."

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