The explosion of the Internet of Things represents a massive opportunity for credit unions, according to a new report by Javelin Strategy & Research. 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.
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:
1) Internet of Things and Connected Payments
2) Adoption of New Biometrics
3) Adoption of Wearables and Mobile/Social Usage
With the new AudienceSCAN study results reporting 25% of Americans are already credit union members, these insights could help unions keep them, and find ways to recruit new members.
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. 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.
Credit unions have an opportunity to educate their members about adopting the latest tech offerings. Try doing so with some newspaper (print, online, mobile or tablet) advertising. The new AudienceSCAN survey showed 26% of Credit Union Members took action after seeing newspaper ads.
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
Communicate these strategies through television. The AudienceSCAN survey results revealed 62% of Credit Union Members took action after seeing TV commercials in the past year.
Among nonusers of mobile banking, 39 percent of credit union members prefer dealing with people, compared to 34 percent in the general population. Skepticism for new and unproven technology, such as voice banking, is high among credit union members, with 36 percent saying they do not feel it is secure, compared with just 29 percent 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.