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Frictionless Payments
Written by Cyndie Martini
on May 02, 2016

In today's world, consumers expect to be able to answer any question at the tap of their smartphone. Consumers want readily accessible Information at all times, regardless of location. This applies to most anything, not excluding financial information.

According to a report from the Federal Reserve, in 2014, of 18- to 29-year-olds that have both a mobile phone and a bank account, 60 percent use mobile banking, as do 54 percent of 30- to 44-year-olds. Among those that use mobile banking, more than half use it to:

  • Deposit a check using the phone's camera
  • Receive alerts from the financial institution
  • Transfer money between accounts
  • Check an account balance

In fact, nearly all of mobile banking users performed the last action.

It has become clear over the past few years that having a mobile app is crucial to credit unions and other financial institutions. One study by the Independent Community Bankers of America found that just about three-fourths of millennials with an account at a bank or credit union said having a mobile app was very important to them.

Differentiation is key
But it's not enough to just have a mobile app anymore. Robb Gaynor, a co-founder of Malauzai Software, which develops mobile and online banking software for financial institutions, explained that many financial institutions' apps are unremarkably similar, without anything to differentiate them from their competition, according to Mobile Payments Today.

"We're at a relative point of saturation [with mobile banking apps]," he said. "Everyone has an app and they're all kind of the same. The days of mobile 'me too' are over and now people are looking for differentiation [with their mobile banking apps]."

It's important that credit unions make their apps unique to the particular consumer experience their members need. One example is the app USAA provides for its consumers. This financial institution serves military personnel, veterans and their families. This is one large sector of the population that famously has a very mobile life. While many members are stateside, there are still plenty that are stationed at military bases overseas.

When one of these customers needs to open a new line of credit, he or she won't be able to walk into a local branch if stationed elsewhere. The institution's mobile app was the solution to their problem because it allows members to open a new account when they need to. It also uses facial and voice recognition to avoid fraud.

"These are small things, but they're a big deal," Gaynor pointed out. "It's a new feature, it's different, but it makes it easier for everyone to bank. USAA has probably done the best job of finding features that allow them to differentiate [from others]."

Make it simple
Having a unique app is important, but that only goes so far. The app must also be very intuitive. A consumer should never wonder what button to tap next, The Financial Brand stressed.

"There are reasons that terms like 'seamless,' 'simple,' and 'frictionless' are now the dominate UX design themes," said Dan Latimore, the senior vice president of banking at Celent, a research and consulting firm that focuses on information technology for financial institutions. "Consumers have been conditioned to expect that experience from non-banks. Financial institutions that can't deliver lose potential customers."

Some products and services, such as mortgages or new accounts, might be difficult for credit unions to offer through their mobile app.

Anything a credit union offers on the website should also be offered through the phone. But that doesn't mean the forms should be the same. In fact, a form that makes sense on a computer might not work at all on the phone. For instance, something that involves a lot of consumer input will be more difficult on the mobile phone. While it might be difficult to take away some fields in the forms and replace them with easier-to-use alternatives, mobile apps have the benefit of a camera and authentication methods that a computer doesn't have.

As more consumers come to expect mobile banking to be as seamless as possible, credit unions will need to adapt to the changing landscape. It's crucial they have their own unique mobile app that not only reflects the credit union's brand, but also caters to the needs of its members.

 

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