The widespread use of smartphones and the Internet is changing the way a lot of people live their lives and giving rise to a range of new terminology. According to research by Pew, smartphone usage is not just growing in America but around the world. This has lead to service providers in a wide assortment of industries creating apps for goods, services, and subscriptions. What this means for credit unions is the increased use of "apps" to make purchases using credit and debit cards.
The definition of app seems to be changing too. More and more this is the label being applied to any range of services available online designed to make entire transactional experiences more convenient and customized instead of the original literal definition of an app (application) that is installed on a phone.
How "Apps" Are Changing Banking
Several services have switched to an app ecosystem where once a card is entered it has the option to become the default payment. This means that if a customer enters your credit union’s card it becomes the default payment method for all one-time purchases and long-term subscriptions. Consider that Amazon has had sustained growth for several years. This is also true for other popular subscription services such as Netflix and Spotify. It becomes clear how much impact the "default payment" option stands to influence interchange revenue.
It is also worth taking the time to examine the reasons customers are moving to apps.
- Convenience: saved payment methods within apps are convenient. It saves shoppers the hassle of pulling out credit or debit cards. Plus a mobile payment app means you can complete a purchase without a wallet. Your objective these days it to get your credit union’s cards entered into these apps and like with a physical wallet you want your card to be the one customers most often use.
- Safety: the extra layers of protection the latest smart phones offer are seen as beneficial by many consumers. A stolen card is easier to use than a locked phone that requires a password, thumbprint, or both. The enhanced security could serve to make consumers more confident in using their cards more often.
- Ease Of Access: more than ever people are making use of their phones for a variety of tasks. Being able to pay with a device they are already using daily is just one more added benefit. As apps become more widespread and the technology landscape continues to evolve on the platform mentality, credit and debit payments will continue to transition with them. Imagine, your credit union literally at the end of someone's wrist on a daily basis, and part of their routine. Top of app can also mean top of mind.
Thinking Top Of App
While the technology has changed, your goals have not. While a lot of customers may no longer be using physical wallets, the cards issued by your credit union remain a reliable avenue for members to pay for everyday purchases and an important revenue stream for you. Staying on top of technology innovations is not optional, it's crucial. Finding innovative ways to use it to help members save time, feel secure and appreciated by your credit union are sure to influence the odds of retaining and attracting new ones.
Status Quo is the Real Enemy
Changes in technology and consumer behavior relating to it have put many financial institutions interchange revenue at risk. It may be as simple as failure to innovate that is deepening the risk. Maintaining the status quo, never looking outside the usual routine could be a prominent factor in determining success or failure. One of the best ways to assure customers keep using their accounts (either online or through an app) is to make accounts easier to manage and link them to goods or services they already use. Competitors offering modern conveniences made possible by the latest technology has to offer are going to be more attractive to customers experiencing these benefits in all the over avenues of life. By staying current with modern technology trends credit unions stand only to gain by making the leap from top of wallet to top of app.