Technology Trends and Credit Union Industry Update

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Technology Trends and Credit Union Industry Update

• Scott Hodgins, Senior Directorshodgins_at_crnrstone.
  com
• Cornerstone Advisors
• September 1, 2009

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TECHNOLOGY TRENDS
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Technology is Unavoidably Complex But
Simplicity Wins!
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TREND 1 Payments Up for Grabs

• Cards Gone Wild
• Micropayments/Contactless
• Loyalty Programs
• Prepaid Gift Cards
• Decoupled Debit (maybe)
• Check 21 beyond
• Remote capture unleashed
• Branch capture taking hold
• ATM/kiosk capture
• Consumer remote capture/deposits
• Alternative Payments
• PayPal, BillMeLater, etc.

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TREND 1 Payments Up for GrabsImpact to
Your Institution Sample
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TREND 2 Mobile Warfare

• Wireless banking has arrived
• Two-way SMS (text messaging)
• Downloadable application
• Browser based
• Balance and transaction inquiry
• Funds transfer (internal)
• Second factor authentication for online banking
• Bill payment and presentment
• ATM/Branch locator

Mobile banking adoption up 5x in past year to 5.7
million active users. TowerGroup, June 2008
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TREND 2 Mobile Warfare

• Mobility by the Numbers
• 229 million mobile phone subscribers in the U.S.
• More Americans have access to mobile phones (80)
  than have access to the Internet (69)
• Over 80 of all cell phones are text-enabled
• 40 of mobile phone users already actively use
  text messaging

Sources Analysis Inc., Ipsos MORI, Verizon,
Cingular, Washington Post, Disney
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TREND 2 Mobile Warfare

• Mobile transactions are emerging
• Person-to-person remittance
• Mobile bill pay
• Retail purchases (gas, music, books)
• Online subscriptions
• Mobile rewards
• Mobile can become profitable when card and phone
  combine

Financial transactions via mobile phone to
generate 300 billion by 2013. Juniper Research,
July 2008
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TREND 2 If mobile is the 'next big thing,' what
are our options?

• What are the major credit union core providers
  doing?

• Other partnerships with credit union application
  providers

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TREND 3 Delivery Channel Renewal

• CUs are interested in moving beyond basic deposit
  automation and teller functionality that core
  provider solutions offer best-of-breed branch
  automation solutions include
• Quick new deposit account setup workflow
• Single source of data entry with interfaces to
  partners (credit/fraud/OFAC screen, check order,
  debit card order, etc.)
• Single (360) member view
• Enterprise contact management
• Cross-sell recommendations (via rules and/or
  external feeds)
• Service request workflow/automation
• Closed-loop referral workflow/automation
• Consumer/small business loan origination workflow
  (with interface to decisioning engine, doc prep
  engine, etc.)
• Call centers are able to take advantage of the
  above functionality as well and are queuing calls
  based on member segment

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TREND 3 Delivery Channel Renewal

• Core provider teller automation offerings still
  dominate outside the top 100 banks, but
  best-of-breed teller automation solutions
  include
• Enterprise contact management
• Service request workflow/automation
• More robust risk management automation (CTR, SAR
  automation, policy enforcement)
• Workforce optimization solutions are being
  deployed to efficiently schedule branch and call
  center staff

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TREND 3 Delivery Channel Renewal

• In addition to considering mobile banking,
  financial institutions are refreshing their
  Internet delivery channel
• Retail features
• Online account opening/funding
• External account transfers and account
  aggregation
• Personal money management (Quicken lite)
• Extended account history
• Same day/next day bill pay
• Consumer remote deposit capture
• Commercial features
• Extended imaging features (remote deposit capture
  integration, lockbox)
• Focus on usability
• ATM channel enhancements gaining traction include
  fast cash and other preference customization,
  image deposit capture, and personalized marketing

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TREND 4 Finance Gets Social

• Social Finance
• Consumers are using online services to make
  educated financial decisions
• Community based lending (P2P lending) has left
  the building
• Online savings accounts begin to surface
• Wesabe, Geezeo and Mint are providing a new,
  social networking twist to personal financial
  management
• PFM-lite functionality that can interact directly
  with online banking sites (meaning users are
  visiting your site less)
• Community tips on goal-setting, spending less,
  saving more

Monthly Unique Visitors to Select PFM Sites
Source netbanker.com, February 2009
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TREND 4 Finance Gets Social

• Internal collaboration is gaining ground
• Intranet
• Wikis
• Blogs
• Prosper reports 400,000 members with 120 million
  loans funded
• SEC registration caused difficulty for many P2P
  lenders, but in spite of Zopas exit more are
  opening their doors and with varied models
• Pertuity Direct
• Virgin Money
• People Capital
• Dozens of banks and credit unions now have
  Facebook pages
• Financial institutions are now blogging

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Trend 4 Will social networking impact how my
members manage and discuss their finances?

• Social finance means the conversation about your
  credit union can happen without you
• What can you do?
• Reactive
• Subscribe to blog keyword alerts in addition to
  news article keyword alerts (using Google alerts,
  for example)
• Monitor for potential service issues you could
  also choose to selectively (and carefully)
  respond to member issues
• Proactive
• If youve got something unique to offer, start
  your own blog (or, if youre really adventurous,
  an online community)
• Get your message out to your SEGs (RSS, intranet
  links, etc.)
• Blog itself is low-cost the care and feeding
  is the hard part

If a member of your credit union was standing in
the middle of a town square in front of a rapt
crowd, praising or criticizing your service or
products, would you go outside and listen?
--Enterprise Magazine, September 2007
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The Strategic Response Value
METRICS AND PROJECT JUSTIFICATION
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(No Transcript)
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