By Ray Birch
ST. PETERSBURG, Fla.—When credit union marketers think about developing new products, one of the first things that comes to mind is how that product will interface with a mobile device.
And that, observed Jeremiah Lotz, VP of product management at PSCU, is one of the biggest effects the iPhone has had on financial services, changing how credit unions think about product development.
“Ten years ago mobile was not a big thing. Online was coming into its own, and when marketers thought about new products, online was on their mind,” said Lotz. “Now, in many cases, mobile is not just on people’s minds, it’s first and foremost. I think most marketers now develop first for mobile. They typically think more about how the consumer will experience their financial services product on their mobile device. CUs have had to reengineer how they think about delivering products.”
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.
Solutions For Different Devices
Lotz said what is also happening in CU marketing departments is that credit unions are having to develop solutions to meet different devices and different lifestyles. He especially emphasized that last point.
“The iPhone, and all the devices that have followed, have created a whole new level of expectation around the consumer experience,” said Lotz, noting how people expect to be able to do more things, such as their banking, while on the go.
Lotz said that even how consumers interact with brick-and-mortar merchants has changed due to the iPhone.
“When I walk into a mall, some of the opportunities have changed to engage with a retailer, either at a product counter or at checkout,” said Lotz. “There are more digital screens to interact with, touching things with your finger. I think the iPhone was the first device to really bring this touch-screen concept to the forefront.”
Has the move to mobile been good or bad for credit unions—good in that credit unions can now reach more consumers without needing to build a branch, or bad in that the cost to keep pace with mobile advancements can be challenging for smaller credit unions?
“I think the advancement of mobile, overall, has been positive for credit unions,” said Lotz. “It has allowed them to add members who are not physically located near a branch. And it gives them the opportunity to reach their members in new and different ways.”
Face Of Fraud
But the face of fraud has changed thanks to the iPhone, Lotz noted, in large part because of a phenomenon seldom encountered a decade ago—new members who never physically show their faces to the credit union.
“It’s good that mobile has opened more doors for consumers to access the credit union, but at the same time it has opened more doors for crooks,” said Lotz. “But I think the advancements in mobile security, such as biometrics on the phone, are working. There is an entirely new level of security, thanks to the iPhone.”
Security has advanced with mobile payments, added Lotz, pointing to tokenization used with digital wallets. Some experts have stated that tokenization and biometrics together make digital wallet payments very secure, recognizing, however, that many consumers still are concerned about security with digital payments.
Lotz also believes smartphones have helped credit unions do a better job of onboarding, saying it is now easier to contact new members without being intrusive.
“Members, thanks to mobile, just interact with their credit union more often,” he said. “In the past maybe they interacted two to four times a month. Now it’s two to four times a week. That gives the credit union more opportunities to connect with new members and stay top of mind with them.”
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