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Loyalty To Mobile Banking Kept Some From Switching To CUs
PLANO, Texas (3/18/13)--Credit unions could have gained even more members than the 2.2 million members they added  in the weeks surrounding Bank Transfer Day, if they had made it easier for consumers to transfer their mobile accounts, according to  Jim Van Dyke , CEO of Javelin Strategy & Research.

Although the Nov. 5, 2011 event was a big gift to credit unions, not all credit unions were ready to turn unhappy customers into loyal members, he said.  Many people dissatisfied with their big bank's overwhelming fees and underwhelming customer service supported the idea of moving their accounts to a credit union, but disconnecting from their big bank's mobile banking product proved to be a deal-killer for some, said Van Dyke.

Van Dyke will be among the presenters at Catalyst Corporate FCU's Accelerating Success Conference, to be held April 9-10 in conjunction with Catalyst's Annual Meeting in San Diego.

Javelin conducts research on risks and opportunities in mobile initiatives, multichannel financial services, payments and security, risk, and fraud. As part of that research, Van Dyke traveled to Occupy movement protest sites in the fall of 2012 to research consumer attitudes associated with Bank Transfer Day and certain financial services, including mobile banking.

"I spoke with people who wanted to move their accounts from a bank to a credit union," he said. "But when I asked, 'Are you going to switch,' I heard, 'No. I do everything on my mobile.' If implemented correctly, a loyalty factor exists with mobile banking, much like the loyalty surrounding bill pay in the late 1990s," Van Dyke told Catalyst Corporate.

Mobile has emerged as the new critical access point for consumer accounts, he said. "It can move members from a secondary to a primary relationship with a financial institution. That's important, because secondary relationships have all of the same costs that are associated with a primary relationship, but without the profitability," he said.

How credit unions deploy mobile matters, Van Dyke said.  Credit unions should not feel pressured by vendors to buy the latest, greatest technology. Nor should they sit back on their heels to wait for a better time to evaluate participation in the mobile arena, he added.

Certain features--such as the ability to check balances--are important to all mobile programs, but they have to be blended with strategy unique to an individual financial institution. To be successful, Van Dyke said, strategy should be built on answers to questions such as:

  • Who are you trying to serve (field of membership)?
  • What are your age concentrations?
  • Is your membership high-tech or low-tech?
  • What is the service distribution channel mix?
  • Who are you competing with?
  • What makes your institution different?
  • Where are you in the mobile life cycle?
  • Does your purchase align with branch strategy? For example, would mobile deposit make sense given the location of your members and the number of branches you have?
"Avoid the extremes of trying to do everything and doing nothing," he said. "You must be in mobile, but you can pick your battles."  He recommended two "smart bets" for lower cost, higher return strategies:

  • Provide text message alerts for low balances or payment due dates,  and
  • Plug into apps--Android for the younger members and iPhone for the older. Put Windows and Blackberry platforms farther down the list, he added.
Van Dyke will share additional insights from Javelin studies on mobile banking in his April 9 conference presentation, "How Mobile Banking Can Increase Return on Investment." Catalyst Corporate will have information on its mobile services at the conference product expo.  Early bird registration ends Tuesday. For more information, use the link.
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