Strategic Adoption Makes Technology Moves Count

One California credit union balances investing fast with investing wise across its remote delivery suite.

The less than anticipated performance of Facebook stock is yet another reminder that when it comes to money, technology, and especially the both together, some opportunities must be seized immediately and others cautiously surveyed from a distance.

Star One Credit Union ($6.1B, Sunnyvale, CA) knows how to do both ? assuring that each new technology it does embrace is advanced enough to create value for both members and the institution.

We do not consider ourselves locked into a single technology adoption strategy, says Carol Safberg, the credit union’s executive vice president of operations. We were late adopters to some aspects of online banking, like bill pay, and early adopters in others. But overall, this channel became extremely successful for us.

More than half of the roughly 89,000 members at Star One currently utilize the online suite.

When it came time to consider mobile, the credit union was looking to enter the market in the most successful way, even if that meant waiting for the right partnerships and capabilities to develop before it did so.

Five weeks ago Star One rolled out the soft launch of its new mobile solution. While the service has not yet been fully promoted, and the Android and iPhone apps have only just been put online for download, the channel already has over 2,300 users.

This strong start is indicative of the big things the credit union sees on the horizon for mobile, but the plan is to get there in phases, says Safberg. We want to be consistent in managing this influx of new users, and make sure the web services team has a good handle on any initial concerns or questions before we take it broader.

If the adoption and ease of transition continues as is, the credit union plans to market mobile much more aggressively in the months ahead, with in branch signage, public advertisement, and online promotions

A three way collaboration between mobile provider Tyfone, remote deposit capture (RDC) provider Ensenta, and Star One allows the credit union to offer a multitude of mobile services, without a multitude of siloed vendor contracts or back-office operations to manage. It also allowed development of an expanded list of capabilities that other financial institutions rushing to be first to market may have overlooked.

There are a number of features that are pretty unique to our program, says Margarete Mucker, vice president of remote services. One is the aggregation of other joint or primary accounts accessible through a single log in, and there is also ability to transfer funds between those accounts.

This introduces a critical control aspect for mobile members who want to keep an eye on a child or teen’s spending, track their own budget, or help manage the finances of other economically vulnerable segment of the family, like an elderly parent.

Current features like real time RDC and long-term goals, like the option for existing members to open sub-checking accounts, will eventually help untether members from many branch transactions. At the same time, next-generation mobile alerts will help unobtrusively keep money matters on their minds.

Alert options include a debit alert that notifies the account holder by text of any transaction over a certain dollar threshold, says Mucker. High-touch users could set this feature to levels as low as $1, staying on top of every purchase. And because pin-based transactions come through in as little as 30 to 45 minutes, the account holder and potentially the institution have more ability to take action in the case of fraud.

Other users may choose to set the threshold higher, and simply use the feature as another tool to track spending on the go.

Star One also struck on a unique strategy for mobile marketing and cross-sell through its innovative rate watch feature. This informative function can be set up by members to notify them whenever rates change on a product or service they’re interested in.

In the future, the suite may also feature a Regulation D counter ? which allows users to better track withdrawals and transfers from non-transactional accounts before they hit the regulatory limit.

Members will either use mobile bill pay in lieu of or in addition to online bill pay, so it will help with adoption from members we haven’t yet captured, says Safberg. About 25% of online banking users currently use the online bill pay option.

With mobile, it will be easy to schedule payments but not to set up new billers because of security concerns, says Mucker. Online is still a necessary part of the equation, but with the right vendor partners and risk management tools, the ability to set up new billers via mobile is foreseeable on the horizon.

We contracted with Guardian Analytics to add FraudMAP Mobile to our mobile product to provide an extra layer of security to further mitigate risks, says Mucker. We currently utilize Guardian Analytics FraudMAP software for our Online Banking channel and we can see the benefits it can bring to mobile.

The credit union is also beginning to consider its position in other aspects of the mobile payments landscape, and already has the vendor relationships in place to support them ? but there are too many unknowns to warrant a move to any new payment technology just yet.

There’s only value to members in a new technology if they will actually use it, says Safberg. With so many players and interested parties involved in the mobile payments space, we don’t want to get wrapped up in one solution, only to have member preferences go another way.

The cost in the current environment remains prohibitive, Mucker adds, advising that these solutions will also create new complexities and liabilities because of the need for multiple vendor partners.

Right now, mobile users are primarily concerned with convenience, she says. But credit unions owe it to them to vet each option’s security, the process for disputes and chargebacks, and other usability components that members may not take into account.

When Star One does decide to bring the next phase of its mobile service to members, a culture of strategic adoption will help ensure the decision is something both parties will be satisfied with years down the line.

May 27, 2014

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