Options for Apps

As mobile adoption continues and mobile banking becomes a must-have service for many credit unions, leaders face a choice: They can sign up for vendor apps that can be implemented quickly and affordably and stop there. Or they can spend the time and money to push into innovative territory and reach for apps that distinctly differentiate them.

Going beyond available commercial products is a challenge, but a few CUs are doing it.

For example, $1.6 billion ORNL Federal Credit Union, Oak Ridge, Tenn., is bringing mobile apps to members via a state-of-the-art core mobile banking app from Orlando, Fla.-based Kony. “We started with the basics,” notes Tommy Smith, former SVP/chief marketing officer, “but we added several really valuable features. There’s a way members can see all their balances without logging in and entering their user ID and password. All it takes is a tap.”

Game Changers

That’s cool, but two other app features qualify as what Smith calls “game changers.” One is called “Focus Money Manager.” It’s the personal financial management software from MX Technologies Inc., Lehi, Utah. That product and others from CU industry vendors are familiar to many CU marketers, but ORNL FCU has made it mobile and integrated it with its mobile banking app, Smith explains.

“They were available separately, but we thought it had more value if we brought it all together. MX had the PFM piece and Kony had the mobile banking piece. We got them to build communication links and share data so a member could see all of his or her financial relationships, not just the ORNL FCU accounts. Now they can plan and manage their financial lives on the mobile devices they prefer, courtesy of ORNL FCU.”

The other game-changer that reaches beyond mobile banking is a community events function that makes ORNL FCU’s app a prime source of knowledge about what’s happening in certain community activities.

This feature was brought to life when Dogwood Arts, a community partner that promotes the region’s arts, culture and natural beauty, held its annual three-day “Rhythm N’ Blooms” music festival in Knoxville, Tenn., in April. ORNL FCU had gathered all the information about times and venues from Dogwood Arts and made it available on an app that became the semi-official guide to the festival. “We set up a data feed between Dogwood Arts and Kony,” Smith explains.

Festival promoters advised attendees to download the app to see what they could do. Printed material at the registration site had a QR (quick response) code that, when scanned, would bring up the ORNL FCU app. Thousands of music-lovers, CU members or not, were relying on an ORNL FCU-branded app to get the most out of their festival experience, Smith reports. “We had the only mobile guide there,” he says. “We showed what we could do with mobile technology and our sponsorship of community organizations. We’ll be doing this with other organizations.”

That was creative use of the right technology. “Kony has a flexible platform that lets us customize and bring in data from third parties,” Smith explains. “Once we make the connections, Kony can inject all this data into our mobile offering so it’s all there for members. We expect to do this with six or seven partners.” Over 30,000 of ORNL FCU’s members use the mobile app, and about 10 percent of those also use the PFM app, he reports.

Such innovation is expensive, Smith concedes, but insists it’s a strategic investment. “This isn’t a fringe activity for us. It’s a core part of our three-year strategic plan.” That investment has put ORNL FCU well ahead of the pack. “Nobody else is doing this yet,” Smith claims. “In many respects, we’re the first. We hope to deepen relationships with existing members and encourage relationships with new members.”

Next up? “We’re finding ways to auto-populate processes to make the member experience more efficient,” Smith says, and “pursuing a feature that will allow members to block or replace lost debit cards.”

Mainstream Strategy

$2.7 billion Virginia Credit Union, Richmond, is aggressively working to bring the mobile banking experience to its members by expanding the mobile menu to equal the desktop menu, primarily using commercially available apps and differentiating itself by strategy more than technology.

For example, the CU cites its early embrace of Apple Pay as an example of its mobile strategy, even though the app belongs to Apple, not the CU, and the experience of an Apple Pay mobile user is pretty standard, regardless of financial institution. The strategy lies in empowering the member and hoping to get the Virginia CU card at the top of the wallet, according to Frank Macrina, VP/e-services, cards and payments.

But Virginia CU also touts its success with a mobile loan application with a front end that was built internally.

“We’ve made it very friendly,” says Todd Feldman, VP/marketing. “We’re seeing 57 percent of those who start to apply on a smartphone or tablet complete the process, compared to 53 percent who start to apply using a desktop,” he reports. “We think that’s phenomenal.”

It’s especially easy for members who subscribe to Virginia CU’s online banking, because they can apply and watch the system populate many fields in the application automatically. But not-yet-members are completing their applications as well. To join the CU, the desktop channel works best for now, but Virginia CU is getting ready to launch a mobile gateway to membership, he says.

The CU’s technical strategy favors integration of commercial apps over building stand-alone solutions, but “we would go with a stand-alone app if an integrated solution is not available,” Macrina says. “We don’t want to introduce technology that slows down the process.”

One Virginia CU innovation that won’t come from Apple or a mobile banking vendor is financial education content over a mobile device. “We want informed members, and we’re looking at ways to make educational content available through members’ smartphones,” Feldman reports.

Commercial Products

Mobile app choices pose a familiar dilemma. Generic solutions are efficient, but limit differentiation. Vendors target big markets, not individual CUs. 

“Software vendors like to build a solution and then collect revenue,” observes David Eads, CEO and founder of Mobile Strategy Partners, based in suburban Atlanta. “They innovate when forced to.” But even the bold innovators build out from commercial products, and the case for vendor-developed software can be compelling. 

Malauzai Software, Austin, Texas, an aggressive vendor of mobile and Internet banking solutions, makes that case. Success, according to Malauzai execs, is a partnership between good software (its role) and good marketing and support (the CU’s role).

“We do the technical stuff,” says Robb Gaynor, chief product officer, “and they do the marketing and training. It takes a real commitment on the part of the CU. They need a strategy, a product manager, a training program, a sophisticated roll-out and strong member communication.”

But they don’t need in-house software programmers or freelancers, he insists. “The security requirements and regulatory compliance around banking activity is so rigorous and sensitive that you don’t want to trust that activity to any old developer.”

Keeping up with new developments is relatively simple. “Development is continuous, but updates are posted regularly at the app store,” Gaynor says. Members keep installing the updated versions. They can even sign up for auto-updates, he points out.

What about apps that don’t focus specifically on banking and related issues? “Everybody talks about that, and they’ve been talking about it for years, but nobody has found a way to make it work profitably in the banking space,” Gaynor says. “We focus on banking activity and make sure it’s compliant and secure.”

Having defined roles, Malauzai pushes to be first and best in its space. “The day the Apple Watch was released, three CUs went live with an app for it. Only one national bank did,” he notes. The three CUs were Malauzai clients.

$556 million Greater TEXAS Federal Credit Union (www.gtfcu.org), Austin, was one of the four financial institutions that offered members a mobile banking app for the Apple Watch the day the watch was released, reports Brandy Conway, VP/marketing. “We’re just down the street from Malauzai Software, and they approached us with financial incentives to test an Apple Watch app,” she says. The functionality is basic. You can check balances, see a transaction history and contact the CU, but you can’t transact on your accounts.

That’s partly because the screen on the watch is tiny and because the app is first generation, but it’s also because of security. “You can’t enter a user name and password in the watch,” Conway points out. To transact, “you’d need to tether the watch to an iPhone 5 or newer.”

CUs shine not through custom apps, but through robust functionality, Gaynor argues. “You can turn debit cards on and off with our software,” he notes. “You can use our revolutionary new version of Picture Pay (read more at cues.org/0814enlargingthepicture). There are all sorts of ways you can differentiate yourself with commercial products beyond balance reporting and bill-pay.”

Mobile Enhancers

Between mobile app vendors and one-off innovations lies a new layer of mobile app enhancers like CU Mobile Apps. “We can work with any mobile banking vendor, explains Rick Hargis, managing general partner for Member Service Solutions, a one-third owner—with the Illinois CU League (www.iculeague.org) and technical developer Metova—of CU Mobile Apps, Naperville, Ill. “We just take the banking data and repackage it for a robust mobile banking experience for the member.”

To make it affordable, CU Mobile Apps charges a flat $250 a month for CUs with fewer than 5,000 members for a standard package, $370 for a premium package, reports Tom Gray, another managing general partner. Mobile deposits are an add-on, and there’s an interchange fee for person-to-person payments, he notes. Contracts are for a standard three years.

Some CUs don’t have the resources to build mobile apps on their own, and traditional mobile vendors are not helping them differentiate, Eads argues. That situation has opened the door for new tech boutiques like Mobile Strategy Partners to innovate around the mobile banking inertia. “It’s our job to help CUs innovate around the edges, to rely on vendors but to get more than their vendors are selling them,” he says.

You can differentiate by functionality, but also by friendliness, Eads says. Of the people who try to open an account through the mobile channel, about 80 percent give up before completing the process. The experience needs to be streamlined and intuitive, not a technological obstacle course, he insists. In July, Mobile Strategy Partners launched a subsidiary, Gro Solutions, Inc., dedicated to helping banks and CUs grow through more effective customer acquisition.

A good way to innovate around the edges is to create a mobile launch site for whatever promotional campaigns the CU is planning, Eads points out. “Offer them a QR code that goes right to the campaign page from a campaign call to action.”

Looking to the future, indirect lending should be fertile territory, Eads predicts, as CUs find ways to link their mobile apps with those of car dealers and Realtors.

Don’t limit your mobile banking app to members, Hargis emphasizes. He knows from experience. To refinance a high-interest auto loan, he found a CU that didn’t lock him out of downloading its app had the best refinancing rate. So he used the app to join the CU and refinanced his loan, all in a few minutes.

Deep Linking

The choices are more complex than vendor-supplied vs. build-your-own apps. Architecture also matters, insists Matt Dean, CEO of Trabian Technology, Indianapolis. “We can provide mobile banking and integrate with the core providers, but we encourage CUs to build their own application programming interface as a middle layer,” he says. “It’s more work, but it puts the credit union in control of their mobile banking instead of us. They can make changes in the API—change their bill-pay vendor, for example—and it flows through to the app.

“We build mobile banking apps to go on top of the API” a CU builds, he explains. “We’ll provide API specs and even a starter version, but encourage them to take over future development to support their growth. We think this is better than having them rely on us.” Modules could be built by individual CUs and shared. “You could have a mobile banking app that’s unique to each CU, but built from pieces that could be shared,” he suggests.

Having an API layer requires CUs to build internal IT expertise. “Years ago, CUs hired ad agencies at first and then built internal marketing expertise,” Dean observes. “Now they need to do the same thing in IT to break away from vendor dependence.”

There are two general approaches to aggregating services in apps, Dean explains. One is to put it all together in one large, complex app, ideally built on top of an API. The other way is to embed “deep linking” so a process can trigger another app at a deep level, so you don’t have to go through a start-up screen and take tedious steps to get what you want, he explains.

Dean uses Open Table and Uber as an example. You make your restaurant reservation on Open Table and then click on an icon that orders an Uber pick-up. You don’t have to log on to Uber separately and initiate a pick-up order there. This hasn’t really fully hit yet in financial services, but the idea might be that you can pay a bill when you’re in an app primarily designed to check balances by having the balance-checking app talk directly to the bill-pay app.

Also on the tech frontier are native apps that use JavaScript to grow themselves. Traditionally, an app is a finished product available at an app store. As the app grows and improves, new versions are sent to the app store for downloading. But it’s possible to build apps that grow themselves as the member interacts.

“That’s a step beyond deep linking,” Dean notes. “You could call it ‘deep inclusion’ or ‘deep integration.’ It’s technically feasible already, and it should show up in the market soon.”

Richard H. Gamble is a freelance writer based in Colorado.