Born out of a John Deer employee base in Waterloo, IA, Veridian Credit Union now has well over 170,000 members as well as 26 branches and roughly $2.2B in assets. With 1.3% ROA and 9.6% loan annual loan growth as of 2Q 12, according Callahan & Associates Peer-to-Peer software,the institution knows the strength of face-to-face interactions. But it also knows that there are costs associated with those interactions and recognizes the need for more efficient, innovative remote access alternatives.
Verdian already has around 81,800 online banking users conducting around 150,000 transactions per month via this channel. It also has around 13,600 mobile users who send around 50,000 text commands and receive around 100,000 alerts per month. While members have more points of contact to the credit union than ever before, their evolving expectations for convenience and accessibility have carried over to other areas of the relationship as well, including payments.
Members want to be able to use payment services on their terms, says Renee Christoffer, senior vice president of administration for Veridian. These days, it’s not uncommon for people to not carry cash or checks.
The underlying technology that allows individuals to send person-to-person (P2P) payments electronically has been around for years, yet these solutions have just recently matured to a level where they can quickly and safely interface with the online or mobile banking solutions that credit unions rely on.
Today, modern P2P users have the ability to send payments to their friends, family, employees, or even strangers without knowing any of their financial institution information.
We felt the time was right to start looking at offering this kind of option through our online banking channel, says Christoffer. All the member needs is an email address or a mobile phone number to initiate a transaction. With an ever growing list of options in the peer payments space, the credit decided to back Iowa-based provider Dwolla after weighing several key factors.
Four Factors For Finding A P2P Partner
Time required to process payments and the seamlessness of use for all parties involved were the two primary drivers for the credit union’s selection of their specific vendor partner.
Some solutions may take two days lead time to initiate the ACH transaction and another two days to post that transaction to the other party, Christoffer says. For the modern consumer, that’s far too long.
Price was also factor and variances between the way different vendors charge for payments made an apples to apples comparison complex. Instead, Verdian started off by assessing its own potential for growth within the channel and then worked backward to determine what options would really be most affordable based on their expected member usage.
In a connected world, it was also important for Veridian’s members to be able to initiate transactions and select recipients via social media channels like LinkedIn, Twitter, and Facebook ? something that the Dwolla was able to seamlessly provide.
Image Courtesy of Veridian Credit Union?
Implementing And Unveiling
The P2P solution took about eight months to implement, largely because it was timed to coincide with a swap of the credit union’s online banking and bill pay system.
A balance between convenience and keeping users safe was struck by hosting the payment option as a tab within the credit union’s own secure online banking page. This limited member adoption barriers like creating additional passwords or needing to go through numerous screens to send funds.
The P2P recipients themselves receive either a text or email confirmation that they have money waiting for them, Engstrom says, and this message is tailored upon whether or not they have used the service before. Enrolled P2P users can simply click a link, but non-affiliated users are first required to enroll in the service. From there, they can visit either the P2P provider’s site or Verdian’s online banking suite to receive the funds.
There is typically a debit lag and a credit lag in any ACH transfer, says Brett Engstrom, manager of web services. But with the credit union’s solution, the balance of each particular funding source comes through in real time, eliminating the time needed to verify fund availability. And if both parties are fully enrolled, the solution can bypass ACH entirely, creating the capability for a true, real-time transaction.
This P2P service went live to Veridian members in June of 2012. Since then, the credit union has enrolled nearly 400 members, with these individuals using the service an average of 2.5 times per month.
We haven’t done any traditional marketing for this service as of right now, Engstrom says. However both the credit union and its members have been promoting the service organically through social media channels.
Around 60% of Veridian’s P2P users are under 34, but the technology still appeals to a wide variety of member demographics and usage styles. Transactions typically average around $160 dollars, but they have ranged as high as $10,000 as members use the service for more important transactions or to split bills between multiple parties.