Adapting To Meet the Online Demand

By Jon Pielak

Credit Union Advisor, 2005 Spring

 

 

Online Banking Is Setting the Stage 

The adoption rate of online banking and bill-payment services puts the financial services industry among the fastest growing on the web. Members are becoming savvier in leveraging the Internet on the whole and continue to raise the bar on expectations from their credit union. Potential members still crave the personal service and competitive rates that differentiate credit unions, yet their expectations for professional online conveniences continue to grow.

 

According to 2005 Jupiter research, usage metrics for online banking reflect a considerable surge over the past five years, with the U.S. market going from 17 million in 2001 to a projected 38 million in 2006. Leading the charge is online bill payment, where in 2001, 6 percent of U.S. consumers viewed bills online, compared to a projected 32 percent for 2006. As a result, online banking is now as commonplace a convenience as ATMs or direct deposit. While it may not be a profit center, and no doubt could be categorized as a loss leader, those members who sign on for services such as e-billing are typically more affluent and more likely to delve into ancillary products and services.

 

This complicated, ever-changing world of online banking platforms can become difficult for credit unions to keep in focus. Revenues for online banking vendors are dropping on the whole, resulting in a revolving door of product names, features, and fee structures. Traditionally, online banking vendors generate revenue on a per user/transaction model, which has lost steam in the mid-market, and signs are now pointing toward a more prevalent fixed-fee structure. More and more credit unions are opting out of the cycle and instead are considering building their own solution. This results in an entirely new set of issues to contend with.

 

Tips on Making a Smarter Online Investment

There are four primary facets of a complete online solution for credit unions:

1. Online Banking

2. Web Presence

3. Intranet

4. Member Extranet/Help Center

 

As discussed, online banking is undoubtedly the biggest mountain to climb. Unfortunately, many credit unions have a tendency to let the other three legs weaken, missing out on many of the returns from their online banking endeavors. When these facets are strengthened, many benefits are realized.

 

Professional Web Presence

Building credibility and emphasizing differentiation with both potential and existing members is key here. This is accomplished with sophisticated and user-friendly design, a wealth of content, and a variety of online resources.

 

Content issues are easily addressed with a content management solution. Using such solutions, employees with basic computer skills are able to edit content, update rates, and add pages with ease, promoting organic growth online. (Also keep in mind that consumer compliance requirements apply equally to online content; basically, the same advertising rules that apply to print advertisements and brochures also apply to promotional information on a website. For instance, APRs and APYs must accompany the contractual rates listed for consumer loan and deposit products.)

 

In addition to content, resources such as calculators, applications, promotions, and current rates go a long way to further engage the user and build awareness. (Among other compliance regulations, be aware that if you take loan applications on your website, you must determine whether you’ll provide disclosures online or ensure that timing requirements will be met if they’re mailed.)

 

When providing interactivity for members, a smooth integration of your online banking applications is important; distinctly separate environments tend to foster concerns of security and integrity. With one cohesive environment, the cross-sell into other products and services is far more fruitful.

 

Employee Intranet

With members interacting online, employees need to react quickly and have more resources at their fingertips to leverage. However if you have information in “silos,” (meaning employees may be storing data on their local hard drives or on poorly managed shared network drives), leveraging information enterprise-wide is difficult. As a result, e-mail servers become bogged down with heavy attachments or topics that are irrelevant to certain staff or departments, and syndication of knowledge and resources suffers.

 

To remedy the problem, consider a portal environment that can collect and organize information prior to intelligently distributing it to targeted staff. A robust solution will offer key features such as:

• Document versioning

• Personalization

• Collaboration

• Resource management

 

More advanced features will deliver integration into everyday tools such as e-mail or word processing.

 

Member Extranet/Help Center

When online, members are looking for quick and simple solutions that make their lives easier, and member support services have the opportunity to move more aggressively into this online environment. An extranet can provide one window for members to access information that’s personalized to them, including:

• Personalized products, rates, promotions, services

• Pre-filled applications

• Self-administered account information

 

You will be able to defer help-desk phone calls to a more immersive online help center with functionality such as:

• Downloadable documents and forms

• Interactive demos

• Searchable data

• Online chat with an agent

 

A Challenge That’s Worth It

Moving to work more efficiently with online tools can be challenging logistically and economically. Maintaining the culture of personal service, the “heart” of what makes a credit union thrive, is an accomplishment that poorly-implemented technology can undermine. But a smart investment in online technologies will keep costs manageable and build a solid foundation that will meet the demands of sophisticated members as well as the employees supporting them for many years to come.