“It's not what you look at that matters, it's what you see.” — Henry David Thoreau
Study after study reveals the consumer adoption rate of mobile devices has grown exponentially over the past few years. Mirroring this trend, members are increasingly demanding mobile services to simplify and streamline their personal banking needs and improve their time management. Credit unions should take note and formulate an enterprise-wide vision and strategy to integrate mobile applications into their operations.
It’s not just Millennial and Gen Y consumers who are driving mobile app usage, though; data reveals Gen Xers in their early 30s to mid-40s are also demanding mobile app options. And car shoppers who rely on the assistance of mobile apps are not just young people. The average age for today’s mobile car shopper is 43, a consumer subset that is in its prime money management years. All consumers, however, are using mobile apps at a higher rate for payments and searches. What’s more, mobile app searches are influencing purchasing decisions, including for homes and vehicles.
Approximately nine out of 10 people spend on average 11.5 hours researching their next vehicle before they purchase. The power of mobile is evident, as just five years ago consumers visited six dealerships in person before they bought a car. Today, they visit less than two. In a recent Grey Stripe survey, 78% of respondents reported they would use a mobile app to search for their next vehicle purchase, and 59% of smartphone users already use their device while on the dealer’s lot. The survey goes on to note that the average time spent on mobile apps by U.S. adults now exceeds time spent on the web by 57 minutes per day.
The convenience mobile apps offer to consumers is changing the paradigm of business practices and commerce. Transactional and personal financial management apps are engaging and empowering consumers and members alike. Consequently, credit unions are adopting mobile applications into their service offerings at a faster pace than ever before. At the end of first quarter 2013, the NCUA reported the number of credit unions that have implemented a mobile banking app grew more than 66% from the same time one year ago. According to NCUA, 2,067 out of 6,895 federally chartered credit unions reported offering a mobile banking app to their members. Interestingly, 31% of those credit unions are CUDL clients.
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In building out a long-term mobile strategy, credit unions are considering other types of mobile applications to complement their mobile banking app. Net interest and fee incomes are challenging credit union balance sheets, and a strong auto loan portfolio is a critical success factor for growth. Although there are many vehicle search app providers, only a handful has integrated both the search and loan application functions that would be complementary to a credit union’s mobile service offerings.
Consumer behavior research shows that mobile searches can lead to an auto purchasing decision. However, there are a number of decision criteria a member will walk through. While searching for vehicles, the member must know the app they are using provides information from a reputable and trusted source. The ability to brand the mobile app to the credit union’s marketing theme is critical to build trust in the information the app presents to members.
Mobile apps must be able to quickly present a set of decision criteria in which the member will get the most amount of information in the least amount of time. This is especially true when the member acts on their search result to apply for an auto loan.
“Does the car fit my needs?” is the first decision members make, so the mobile app’s search capability must provide enough detail to make the member want to know more. Relevant data — such as make, model, and price — must appear upfront as that is the most effective way to get members to click and continue the search or purchase process.
“Is the listed price a fair price for the vehicle?” is a logical next step in the search process. This information helps the member better gauge the affordability of the vehicle. If the mobile app is branded to the credit union, the listed vehicle price is more credible to the member.
“Am I buying a lemon?” is a decision that helps the member feel like they are making a safe purchase, so the mobile app must provide accurate data, facts, and evidence of the vehicle. In addition, there must be key differentiators about the mobile app such as accolades, ratings, and “most searched” features. Providing vehicle reviews is also critical in the member’s mobile search and purchasing experience. Mobile apps that provide reviews and conclusions from peers further enhance member comfort level of their decision, from search to purchase.
A mobile app that enables members to submit a loan application to their credit union for an instantaneous loan result is a value-added service that consumers are demanding, so credit unions need to consider this when developing mobile programs. Arming the member with pre-approved loan information on their mobile device will shape not only their dealership experience but also their overall auto purchasing experience.
Formulating an enterprise-wide mobile vision and strategy is increasingly essential for credit unions to remain relevant to their existing membership and grow their younger demographic — a segment of members that perform most of their financial transactions via their smartphone. Mobile apps engage members like no other medium, and credit unions are realizing the payoff; they can build better interactive relationships and enhance loyalty with their members through mobile applications. The advantages mobile apps offer members include instant access after download, an interactive user interface, and focused convenience.
A version of this article originally appeared in the Summer 2013 issue of CU Direct’s Credit Union Lending magazine.