Keeping The Deposits Matters As Much As Controlling The Payments

Panelists at the Credit Union Summit during PayThink 2018 discuss Zelle, product integration, and staying relevant.

The secret to staying relevant in the fast-changing payments world might be to concentrate on the money coming in, not the money going out.

That was the take from Chris Danvers, vice president of payments and digital services at American Airlines Credit Union ($7.0B, Fort Worth, TX), during Monday’s Credit Union Summit at PayThink 2018 in Austin, TX.

As long as you maintain that direct deposit and checking account relationship, you’ll still have the money coming in, Danvers told attendees. It doesn’t matter as much how the money goes out.

That observation came during a lively discussion about peer-to-peer payments, especially Zelle, the big bank-backed P2P solution that’s expected to pass Venmo in adoption numbers this year.


The Zelle network charges transaction fees for using the channel, giving credit unions the choice of offering Zelle while not profiting from it or not offering it and risk losing relevance.

That’s the conventional wisdom when it comes to new payments solutions. Remember the rush to offer Apple Pay? And then the other Pays that followed? Turns out that might not be the case with Zelle.

Security Service FCU ($9.5B, San Antonio, TX) does not offer Zelle. Jay Tkachuk, vice president of online services, says that was a decision that took a year to make.

Zelle just isn’t credit union-friendly, he said at the Monday panel. Our business gets nothing but the liability and the overhead.

Some of the panelists said member surveys indicate Zelle is low on their want lists. Transfers among in-house accounts, instead, draw heavy use.

Randolph-Brooks FCU ($9.0B, Universal City, TX), for example, had 250,000 in-house transfers last month and approximately 50 Zelle transactions, said Charlotte Norton, senior vice president of central operations at RBFCU, adding that the credit union is making decisions based on what it’s seeing.

Danvers at American Airlines Credit Union highlighted other hurdles for Zelle aside from fees.

It’s difficult to find an easy entry point, the VP said.

AACU offers the Popmoney P2P solution right now and will be watching for the Zelle version that Fiserv plans to add. CO-OP also offers Zelle, but Danvers said connectivity is an issue with that and with Fiserv’s solution. Panelists cited systems integration in general as an issue and an imperative for adopting new payments tools, and each of the credit unions represented had their own approach.

For example, State Employees’ Credit Union ($38.4B, Raleigh, NC) used to do everything in-house but now is working with a couple of fintechs on a new mobile app.

But they can’t do everything, said Leanne Phelps, senior vice president of card services at the nation’s second-largest credit union.

According to Phelps, SECU is in a modernization phase.

We’re looking at every system and touchpoint to make us as self-serve as we can be, she said. Each platform has to support all channels, and that means we have to be able to integrate all new products going forward.

AACU is also working with fintech partners while pursuing what it can do in-house. The strategy is simple: provide member service that will keep members using your products.

We’re trying not to have American Airlines flight attendants logging in using hotel lobby access, Danvers said, noting using the app on their phones is more secure.

Providing that sense of security is critical to maintaining member trust and thus their business.

We need to make sure we remain the trusted brokers of that digital relationship, the hub that keeps their identity secured, said Tkachuk from SSFCU. That will go a long way to keep our members tied to us. They need to know we have their back.

Their back, and their favorite caffeinated beverages. Tkachuk said he feels credit unions are at the tipping point in their competition with fintech and other financial institutions, and that budgeting tools like spending reminders need to be part of the payments puzzle.

Give them something that tells them what it’s going to cost them if they don’t quit buying that latte every day, Tkachuk said. You need to add that level of concierge service. If we make sure we’re relevant and help them stay secure, their accounts will stay with us.

September 24, 2018

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