In an effort to “wow” members and correct the misconception that credit unions don’t offer competitive technologies, Redwood Credit Union has developed an in-house peer-to-peer (P2P) solution it calls RCUpay.

“We hope to help break down these barriers by offering the banking solutions and convenience people want and need,” said Redwood Credit Union Executive Vice President Ron Felder.

According to Early Warning Services, a real-time payment, authentication, and risk mitigation firm, the P2P movement is growing at a rapid pace. The company noted that in 2016 that the 20 credit unions and banks in its Zelle network processed more than 170 million P2P payments. This equated to $55 billion in transaction value.

Capitalizing on this trend, the $3.5 billion Santa Rosa, Calif.-based Redwood CU decided to forego partnering with a vendor and took on the task of developing the in-house P2P solution in early 2016.

“There were primarily three developers working on RCUpay, with additional project team members from compliance, payments, member experience, electronic services, marketing, quality assurance and risk,” said Felder.

With 285,000 members, Redwood Credit Union has 72,000 active mobile app users. And while 20 percent of its membership is millennials, Felder said the solution was conceived for the entire member base.

“We see this as a solution for anyone who wants to send money to another person quickly and conveniently,” he said.

RCUpay is integrated in to Redwood Credit Union’s mobile banking platform. Members can sign up online at the CU’s website and/or through the mobile app. The no cost, real-time payments are sent via phone or email.

“One of our goals with RCUpay was to roll out a P2P system that will be used by our members in a sustainable manner,” said Felder. “RCUpay was designed to be very cost-effective long-term with the understanding that RCU would have a large initial investment up front to develop the system in-house.”

In-house development

Felder explained that the programming effort for RCUpay was primarily completed by the CU’s digital banking team as well as additional programming by developers that specialize with its core platform provided by Symitar. Having a flexible core/API was instrumental to the success of RCUpay, said Felder.

“We also used an outside firm to assess the risks and feasibility of developing an in-house solution,” said Felder adding that all potential security issues were also addressed. “It was a big decision, so we fully wanted to understand and verify our decision process.”

Among benefits of developing the solution in-house was the ability to fully customize the member experience, which provides a faster and more seamless transaction, said Felder. Also, there is no requirement to sign-up for a third party service.

“Redwood Credit Union has a large penetration in the North Bay, and we felt a sizable percent of the transactions would be made from member to another member,” said Felder. “So it made sense to be able to make those instantly, rather than sending them out through a third-party, then back to our member.”

Redwood CU EVP Ron Felder
Redwood CU EVP Ron Felder

If the P2P transaction is with another institution, RCUpay utilizes same-day ACH, which costs pennies per transaction, noted Felder. “This makes the system very sustainable from a cost perspective while delivering a ‘wow’ experience that is fully integrated into Redwood Credit Union’s mobile banking app.”

Since launching the solution in May 2017, Felder explained that approximately 60 percent of RCUpay transactions are to another member, and approximately 40 percent are being sent to people who bank at other financial institutions.

“We’re seeing a steady increase in new users, and multiple transactions per user,” he said.

Lessons learned

Before RCUpay was launched, Felder explained that there was “extensive testing” on the CU’s development servers. Next, RCUpay was moved to a user acceptance testing (UAT) environment where live transactions were processed. After adequate testing, the solution was offered to employees for live testing. But when the solution was “soft” rolled out to members, there was a snafu.

“We discovered an odd issue of handling emojis. We didn’t have a test case with an emoji as part of a contact stored on a phone,” said Felder. “The emoji caused issues when the contact information was processed in the system. Fortunately, we were able to find the root cause and release a fix to the mobile app in a very short timeframe.”

With the emoji lesson learned, Felder said it is difficult to think of “every use case” members will complete with any system or technology.

“But as new use cases come up, we try to integrate them into future testing scenarios,” said Felder. “Also, we take our members’ and employees’ feedback seriously because ultimately, this user feedback helps us improve the service experience.”