Most credit unions recognize the growing role and incredible benefits of technology in the financial industry. Some have been fast adopters, but many more have found it challenging, especially as rising costs for software and third-party services squeeze IT budgets. If credit unions are going to survive in a mobile and app-driven world, though, they’ll need to adapt or face falling behind.
The current environment may trigger uncertainty, particularly with how existing revenue streams will be affected. A future-thinking strategy that allows for market shifts, a new look at long-held assumptions, and learning from other non-banking industries will allow you to better prepare for whatever new technological innovations come along.
The Top of App/Top of Wallet Challenge
Payment apps and mobile wallets. They’re meant to simplify life and make it easier to pay for stuff. Forgotten wallet? Don’t want to carry a lot of cash or cards? No problem, just pull out a mobile device and conveniently pay for a purchase. Apple Pay, Walmart Pay, Chase Pay, and Samsung Pay are just some of the apps currently in use.
Retailers and consumers who use them appreciate mobile payments for what they offer: faster checkout, loyalty card integration, and the ability to use collected data to personalize the shopping experience. While mobile payments are not yet used by a majority of merchants or consumers, acceptance is expected to continue to grow, especially as millennials become an even larger economic force.
The same logic applies to e-commerce websites, which similarly store payment credentials and streamline the shopping experience. Although commerce continues to migrate to apps on mobile devices, the top of app concept can be extended to "top of site."
Credit unions are rightly concerned with changes impacting interchange revenue and finding new ways to encourage card use by its members. Never has that goal been more important than the present, as consumers, especially millennials, turn from traditional banking methods and embrace mobile and the Internet.
One of the biggest challenges lies in a common feature of mobile banking apps and countless online payment platforms: they all ask the user to designate a default payment option if they have included more than one avenue for payment. This means they can opt for a PayPal account and not one of their credit union-issued cards. Credit unions need to look for incentives to meet this objective.
The Potential Pitfall for Credit Unions
Since fewer physical wallets are being opened and more payments are being made through apps, the new focus must naturally be to stay “top of app.” You do this by making sure you offer a mobile and online experience that leaves your customers satisfied. Leave them wanting on bill pay, remote deposits, and ease of use and you risk losing them on mobile wallets as well.
How to Meet Tech Challenges Head On
Multiple studies have shown that millions of consumers stay loyal to one card for life. Apple, Chase and Samsung Pay all offer users a simple routine to transfer card credentials when they first sign up. While users can add more than one card, they tend to choose one as the default, just like they do in real life. Get your customers to make your card the default of choice on those payment apps and you have a winning formula for leading the charge!
The fight for top of wallet has traditionally taken place in the world of loyalty programs that offer cash back and other rewards. It still does, but it’s moved to the digital arena, and so must you. These essential marketing tools set your credit union apart from the competition and should include four key components:
- Value: Make sure there’s a genuine return for your customers.
- Relevance: Make the rewards relevant to your customers’ lifestyle and shopping habits.
- Personalized: Make rewards tailored to each customer’s unique needs.
- Convenience: Make it easy to earn and redeem points.
Credit unions face a range of technological challenges both inside and outside the system. Your own survival depends on recognizing and addressing these challenges. Staying relevant – and top of app – rests, then, on your credit union’s ability to grasp and harness new technology.