Growth of Mobile – A Strong Play for CUs
By Cindy Bach, Sr. Product Analyst, Product Management, CU Direct
“It’s not what you look at that matters, it’s what you see.” Henry David Thoreau
Study after study reveals that the consumer adoption rate of mobile devices has grown exponentially over the last few years. Mirroring this trend, members are increasingly demanding mobile services to simplify and streamline their personal banking needs, and improve their time management efficiently and effectively. Credit unions should take notice to formulate an enterprise-wide vision and strategy to integrate mobile applications in their operations.
Data also reveals that it’s not just the Millennial/Gen Y consumers driving the change toward mobile app usage, but also the Gen Xers (early 30s to mid-40s) are demanding the convenience of mobile apps. Mobile car shoppers are not just young people, as the average age for today’s mobile car shoppers is 43. This subset of consumers is at its prime money management years. Mobile apps, in particular, are being used at a higher rate than ever for payments and searches, including home and vehicle purchases.
Not only are searches being performed on mobile apps, but these searches lead to influence purchasing decisions. About nine out of ten people do research before they buy a car, spending on average 11.5 hours researching their next vehicle before they purchase. The power of mobile is clearly evident, as just five years ago consumers visited six dealerships in person before they bought a car. Today, they visit less than two.
Additionally, in a recent Grey Stripe survey, 78% of respondents reported they would use a mobile app to search for their next vehicle purchase. The survey goes on to note that the growth of average time spent on mobile apps by U.S. adults has continued to rise, and now exceeds time spent on the web by an additional 57 minutes per day, with 59% of smartphone users using their devices while on the dealer’s lot. The convenience mobile apps offer to consumers is changing the paradigm of business practices and commerce. Transactional and personal financial management apps are engaging and empowering consumers and members alike. Credit unions are beginning to adopt mobile applications into their service offerings at a faster pace than ever before.
By the end of Q1 2013, the NCUA reported the number of credit unions that have implemented a mobile banking app grew over 66% from the same time one year ago. According to NCUA, 2,067 out of 6,895 federally chartered credit unions reported they offer a mobile banking app to their members. Interestingly, 31% of those progressive credit unions using a mobile banking app, are CU Direct clients.
In building out a long term mobile strategy, credit unions are beginning to consider other types of mobile applications to complement their mobile banking app. As net interest and fee incomes are challenging credit union’s balance sheets, a strong auto loan portfolio is a critical success factor for growth.
Although there are many well-known mobile app vehicle search providers, only a handful have integrated both search and loan application functions within a mobile app that would be complementary to a credit union’s mobile service offerings to its membership.
In keeping the research of consumer behaviors in mind, mobile searches can lead into an auto purchasing decision. However, there are a number of decision criteria a member will intuitively walk through. While searching for vehicles, the member must know that the app they are using provides information from a reputable and trusted source. The ability to brand the mobile app to the credit union’s marketing theme is critical in bridging the trust of the information members are presented with.
Mobile apps must be able to quickly review a set of decision criteria in which the member will get the most amount of information in the least amount of time. This is especially true when the member acts on their search result to apply for an auto loan.
The next decision for members is “does the car fit my needs?” In other words, when considering a mobile app, the search capability must have enough details for the member to want to know more. Relevant data, such as make model and price, must appear upfront as the most effective way to get members to click and continue the search/purchase process.
“Is the price listed a fair price for the vehicle?” is a logical next step in search process. This information will help the member better plan for the affordability of the vehicle. If the mobile app is branded to the credit union, the listed vehicle price is more credible to the member.
“Am I buying a lemon?” The member must feel they are making a safe purchase, so the mobile app must be able to provide accurate data, facts and evidence of the vehicle. In addition, there must be key differentiators about the mobile app such as accolades, ratings and “most searched” features. Also, providing vehicle reviews is critical in the member’s mobile search and purchasing experience. Mobile apps that provide reviews and conclusions from peers further enhance member comfort level of their decision, from search to purchase.
A mobile app that enables members to submit a loan application to their credit union for an instantaneous loan result is a value added service offering that consumers are demanding and credit unions need to consider when developing mobile programs. Armed with this pre-approved loan information on their mobile device can empower the member to shape not only their experience at the dealership, but their overall auto purchasing experience.
Formulating an enterprise-wide mobile vision and strategy is increasingly essential for credit unions to remain not only relevant to their existing membership, but also to grow the younger demographic of their membership in which most financial transactions are now made on their smartphone; their mobile phones are always on and always with them.
Mobile apps engage members like no other medium, and credit unions are realizing the pay-off; they can build better interactive relationships and enhance loyalty with their members through mobile applications. The advantages members can experience are instant access after download, an interactive user interface, and focused convenience.