ST. PETERSBURG, Fla.–By 2020, it is projected there will be more than 50 billion connected devices employed worldwide – or approximately 6.6 devices per person.
This explosion of the Internet of Things (IoT) represents a massive opportunity for credit unions, according to a new report by Javelin Strategy & Research. The report’s findings are available in a white paper, “The Credit Union Guide to Opportunities in IoT, Biometrics and E-commerce,” which was published in conjunction with PSCU and can be downloaded here.
The white paper discusses how the IoT; connected payments from IoT devices; and new banking technologies, such as biometrics, are impacting the financial services industry. PSCU said it also provides a view to the future of banking and how these trends will create new opportunities and pose potential customer attrition threats to financial institutions by looking at three main areas:
- Internet of Things (IoT) and Connected Payments
- Adoption of New Biometrics
- Adoption of Wearables and Mobile/Social Usage
“The white paper segments the banking industry into four categories based on where a consumer has his or her primary financial relationship: giant bank, regional bank, community bank or credit union,” PSCU said. “A great deal of the paper illustrates consumers’ willingness to adopt new technologies, such as voice banking, and their use of existing technology, such as fingerprint authentication on mobile banking. It also examines mobile wallet adoption and top reasons for not using mobile banking. One pervasive theme is that customers of giant banks are more willing to adopt the latest technologies and tend to have higher ownership rates of smart devices, such as smartphones, fitness bands and smartwatches. In contrast, credit union members appear to lag or be at par with the general population in a number of categories.”
According to the white paper, one potential key driver behind this trend is that credit union members tend to prefer having a personal relationship with their financial institution over using technology. Slower adoption rates and lower willingness to use the latest technology should be viewed as both a potential opportunity and challenge for credit unions.
The report suggests four strategies credit unions can implement to ensure they remain the primary FI relationship:
- Encourage members to adopt a “set it and forget it” payment preference for all new connected devices and mobile wallets
- Drive mobile wallet adoption among credit union membership by providing education on how to use the wallet and incentives to drive its payment cards into that wallet
- Develop a strategy to drive credit union cards as the preferred payment choice for six key companies, due to their size and relation to digital payments: Amazon, Walmart, Samsung, Apple, Google and Facebook
- Consider using education to drive adoption of more-advanced banking technologies among members in combination with the desire for a face-to-face relationship
“Among nonusers of mobile banking, 39% of credit union members prefer dealing with people, compared to 34% in the general population,” PSCU noted. “Skepticism for new and unproven technology, such as voice banking, is high among credit union members, with 36% saying they do not feel it is secure, compared with just 29% of the general population who do feel it is secure. There is a huge opportunity for credit unions to introduce these new technologies and features to members in a meaningful way that does not take away from the desired personal relationship.”