October 11, 2017 -
Javelin Strategy & Research has published a new whitepaper that discusses how the Internet of Things (IoT); connected payments from IoT devices; and new banking technologies, such as biometrics, are affecting the financial services industry.
Published in association with PSCU, “The Credit Union Guide to Opportunities in IoT, Biometrics and E-commerce” projects there will be over 50 billion connected devices employed worldwide by 2020, which represents a massive opportunity for credit unions.
The paper also gives insight into the future of banking and how these trends will lead to new opportunities and pose potential customer attrition threats to financial institutions (FIs), by analyzing the IoT and connected payments, the adoption of new biometrics, and the adoption of wearables and mobile/social usage.
Javelin and PSCU segment the banking industry into four categories based on the consumer’s primary financial relationship, including giant bank, regional bank, community bank or credit union.
A large portion of the paper focuses on consumers’ willingness to adopt new technologies, such as voice banking, and their use of existing technology, such as fingerprint authentication on mobile banking. The paper also examines mobile wallet adoption and key reasons for not using mobile banking.
One key theme of the paper is that clients of giant banks are more willing to adopt the latest technologies and tend to have higher ownership rates of smart devices, such as smartphones, fitness bands and smartwatches.
In comparison, credit union members appear to lag or be at par with the general population in several categories.
One potential key driver of this trend is that credit union members prefer to have a personal relationship with their financial institution over using technology.
Rather than be discouraged by lower adoption rates and lower willingness to use the latest technology, credit unions should view this as both a potential opportunity and challenge, the paper states.
The report recommends four strategies credit unions can implement to ensure they remain the primary financial institution relationship.
The first is to encourage members to adopt a “set it and forget it” payment preference for all new connected devices and mobile wallets.
Second, credit unions can drive mobile wallet adoption among credit union membership by educating customers on how to use the wallet and incentives to drive its payment cards into that wallet.
Third, credit unions can develop a strategy to drive credit union cards as the preferred payment option for six companies — Amazon, Walmart, Samsung, Apple, Google and Facebook — due to their size and relation to digital payments.
Fourth, credit unions should consider educating members to drive adoption of more-advanced banking technologies in combination with the desire for a face-to-face relationship.
The paper found that among nonusers of mobile banking, 39 percent of credit union members prefer dealing with people, compared to 34 percent in the general population.
There is also a high level of skepticism for new and unproven technology, such as voice banking, among credit union members, with 36 percent admitting they do not feel it is secure, compared with just 29 percent of the general population who do feel it is secure.
Based on these findings, the paper emphasizes that there is a huge opportunity for credit unions to introduce these new technologies and features to members in a meaningful way that does not diminish the desired personal relationship.