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Loyalty to Mobile Banking Prevented Some Consumers from Bank Transfer Day ‘Switch’
Monday, March 18, 2013 9:00 AM

Bank Transfer Day was a big gift to credit unions, but unfortunately, not all credit unions were ready to turn unhappy customers into loyal members. Many people dissatisfied with their big bank’s overwhelming fees and underwhelming customer service supported the idea of moving their accounts to a credit union on Bank Transfer Day. But disconnecting from their big bank’s mobile banking product proved to be a deal-killer for some, according to Jim Van Dyke, CEO of Javelin Strategy & Research.

Van Dyke – whose firm conducts in-depth research on the risks and opportunities in mobile initiatives, multichannel financial services, payments, and security, risk, and fraud – traveled to Occupy movement protest sites in the fall of 2012 to research consumer attitudes associated with Bank Transfer Day and certain financial services, including mobile banking.

“I spoke with people who wanted to move their accounts from a bank to a credit union,” Van Dyke said. “But when I asked, ‘Are you going to switch,’ I heard, ‘No. I do everything on my mobile.’ If implemented correctly, a loyalty factor exists with mobile banking, much like the loyalty surrounding bill pay in the late 1990s.”

Van Dyke said mobile has emerged as the new critical access point for consumer accounts. “It can move members from a secondary to a primary relationship with a financial institution. That’s important, because secondary relationships have all of the same costs that are associated with a primary relationship, but without the profitability.”

How credit unions deploy mobile matters, Van Dyke said. Credit unions should not feel pressured by vendors to buy the latest, greatest technology. Nor should they sit back on their heels to wait for a better time to evaluate participation in the mobile arena, he said.

Certain features – such as the ability to check balances – are important to all mobile programs, but they have to be blended with strategy unique to an individual financial institution. To be successful, Van Dyke said that strategy should be built on answers to questions such as these: Who are you trying to serve (field of membership)? What are your age concentrations? Is your membership high-tech or low-tech? What is the service distribution channel mix? Who are you competing with? What makes your institution different? Where are you in the mobile life cycle? Does your purchase align with branch strategy (For example, would mobile deposit make sense given the location of your members and the number of branches you have)?

“Avoid the extremes of trying to do everything and doing nothing,” he said. “You must be in mobile, but you can pick your battles.” Van Dyke recommended a couple of “smart bets” for lower costing, higher return strategies: 1) Provide text message alerts for low balances or payment due dates; and 2) Plug into apps – Android for the younger members and iPhone for the older. He advised putting Windows and Blackberry platforms farther down the list.

Van Dyke is among the presenters slated for Catalyst Corporate’s upcoming Accelerating Success Conference.  For more information, please visit www.catalystcorp.org/annualmtg.aspx.