By Ray Birch
RANCHO CUCAMONGA, Calif.—Nothing is more indicative of the impact the smartphone has had on financial services than how it has become so central to the lives of virtually all consumers.
Michelle Lemieux, product manager with CO-OP Financial Services, made that point when asked by CUToday.info about life in the decade since the iPhone debuted. She observed how consumers today have changed their thinking about how they accomplish many of the most fundamental and daily tasks, including banking. The smartphone, and especially the “apps” ecosystem, has led to an environment in which consumers don’t ask as much what they can do on their smart devices, but instead become aggravated over anything they cannot do. “That means every aspect of banking,” said Lemieux. “It’s become a complete consumer mindset change in the past 10 years.”
The iPhone turned 10 years old in June, and the Apple smartphone and mobile devices that have followed have changed the very concept of how a financial institution—and the services market itself-- is perceived. The iPhone has changed the role of the branch by offloading an ever-growing number of transactions, especially payments, to a mobile device, reducing costs and extending the reach of credit unions beyond any fixed geography. But the iPhone, and the devices that have followed, have also meant new competitors often built specifically for the platform, while legacy competitors with deeper pockets are also as close as a click for CU members. To mark the 10-year anniversary of the iPhone, CUToday.info is running a series of stories on a decade of change launched by the iPhone that’s likely unmatched in the history of financial services.
'Life Changing'
Lemieux termed the impact of the iPhone on herself as “life changing. I go into my car and drive away from my house and the first thing I often think of is did I bring my phone–not did I bring my purse, as I used to do, but my iPhone. It has just changed how we think.”
Lemieux contends that the phone has dramatically changed how people think about getting tasks accomplished.
“If we want to get something done, the first thing I think we think about is, is there an app for that? And, you know, there usually is,” she said. “I have a teenage son whose life is wrapped around his phone. I don’t think he ever plans to carry a wallet.”
The effect of this consumer mindset change on financial institutions, especially smaller ones, has them fighting to keep up with the pace of change.
“I think one of the biggest changes banks and credit unions have faced in the last 10 years is now they have to be available to consumers 24/7,” said Lemieux. “No more nine-to-five. Solutions, and sometimes people, have to be in place to meet what has become an ‘on-demand’ consumer market. That is what we are all getting used to, and that is a really big change.”
The iPhone has meant, as Steve Jobs said when he introduced the revolutionary device, “Your life in your pocket.”
What can be challenging is not just keeping up with the pace of mobile delivery change within financial services, but change within the entire retail market, Lemieux said.
“Credit unions’ mobile solutions are not being compared to just another FI. Your members are comparing you to the last mobile app they used. So their expectations have become very high,” she said.
Besides those challenges, Lemieux emphasized what mobile has done for credit unions to extend their reach—allowing CUs and their limited resources to play on more even ground with banks—and market cost effectively.
“I think the smartphone has given credit unions the ability to get their message out more,” she said. “I think it has presented a great opportunity for credit unions, which have trailed banks in their marketing efforts, to reach their members in new, cost-effective ways,” she said.
Impact On Shared Branching?
And for field of membership, Lemieux said that concept has greatly changed, moving away from geographic limitations.
“Let’s say you are a young credit union member heading off to college. Well, in the past you had to consider how you would take your banking relationship with you, and maybe make the decision to leave the credit union. Now you do about anything you can do at a branch on your phone. That physical branch has become less important.”
With the CO-OP Shared Branching network the largest in the country, does Lemieux think the smartphone will impact the importance of that CU asset?
“We still see a lot of shared branching volume and growth,” she said. “But, thanks to the smartphone, we are looking at more ways to turn branches into self-service centers, with new technology to support that,” Lemieux said.
Lemieux contends that the time is right to add more self-service tech to branches since consumers are getting used to doing a lot more banking on their phones.
“Since they getting very accustomed to automated services on their phones, their comfort level with using new technology in branches is much greater than it was ten years ago,” pointed out Lemieux.
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