Despite Slow Start, Many CUs Firm Believers Mobile Banking Set To Surge

KANSAS CITY, Mo. - Mobile banking is slow out of the gate at many credit unions, with most adoption rates idling well under 10%. But IT leaders wager that as members move toward devices with unlimited data plans and wireless services get cheaper, usage will spike.

“We still aren’t seeing a big demand, but I always say–next year!” said Gordon Gregory, VP-technology at $350-million Mazuma CU here, which launched mobile banking seven years ago. Less than 1% of the total membership uses the service, said Gregory.

At $71-million Miami Firefighters FCU (MFFCU) in Miami, adoption is better. About 7% of members with share draft accounts log in to mobile banking, or about 11% of online members, said Grant Sheehan, CEO. MFFCU runs its six-month old service on a wireless application protocol (WAP) that members can view in a mobile Web browser, but also offer text-message wireless banking.

“We expect adoption to improve as members’ mobile contracts expire, and the new technology comes with their service and phones,” said Sheehan.

Karen Pollack, VP-operations at Amplify FCU, thinks it “only natural for people to gravitate toward using their mobile phones for banking transactions since they use them for practically everything else,” perhaps driving up adoption at the Austin, Texas-based CU to about 30% in the next three years.

At the $464-million Amplify, about 5% of online members currently use the CU’s two-year old service, or about 4% of members with checking accounts, according to Pollack.

Big banks don’t seem to be doing any better with mobile banking than CUs. For instance, Bank of America just announced that less than 4% of its 23 million online banking users are signed up for mobile banking.

Yet mobile banking is expected to be one of the fastest growing electronic financial services, with 13% of online banking users taking to mobile banking in 2009, up from 4% last year, according to a survey of 23 of the top U.S. financial institutions by the Boston-based research firm Aite Group.

The CUs that talked to Credit Union Journal for this story said they will rely heavily on Gen Y to lead the stampede to mobile banking.

“Gen Y loves this service,” said Vu Nguyen, information services manager, core systems, at $900-million State Department FCU (SDFCU) in Alexandria, Va.

“However, the average age of our members is 47,” Nguyen said. “We need to inform our other members that mobile banking is secure.”

About 1% of the SDFCU Internet banking users also use mobile banking, but adoption has been growing by about 8% per month for the past three months, added Nguyen. SDFCU launched the service about one year ago.

The credit unions said they plan to plug mobile banking in familiar ways.

“Our strategy is to inform and educate members that the service is now available through all our delivery channels–newsletter, Web, branch signage, wallet cards and press releases,” explained Ron Waters, product manager at $1.8-million SECU of Linthicum, Md, which rolled out mobile banking two weeks ago.

Amplify is ready for the time when members start checking balances and paying bills via wireless devices, Pollack said. “I see mobile banking today as online banking was positioned in 2000. Many wondered if they should offer online banking, and if members really wanted it. Well, today you wouldn’t even think about joining a bank or credit union if they didn’t have online banking. I think the same will be true for mobile banking.”

Sheehan agreed: “It’s just a new service we’re offering to remain competitive.”


Read more about mobile banking at cujournal.com and search the following bolded terms in the archive:

CUs Say They Still Have A Few Hang-Ups When It Comes To Adding Mobile Banking

CUs Hot And Cold On Mobile Banking

Not Reinventing The Wheel

For info on this story:

* www.goamplify.com

* www.mazuma.org

* www.mffcu.org

* www.sdfcu.org

* www.secumd.com (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com