Mobile banking allows credit unions to compete with larger financial institutions. It gives them a competitive edge and greater flexibility. It is also great for lending growth. A study by the Federal Reserve reported that “67% of millennials now use mobile banking, compared to 18% of consumers age 60 or over. This usage gap is projected to widen even more, as 85 million millennials, prone to using their mobile devices for banking, are coming of age.” This translates directly into an increase in lending growth. Here’s why.
Lending Growth and Mobile Banking
One of the greatest assets of mobile banking is 24/7 access. Members can check loan balances at any time, just as they would their checking or savings accounts. They may also have access to other crucial pieces of information, such as principal balance and next payment due date. All of this serves to increase lending growth, as consumers are constantly looking for efficient ways to manage their financial lives.
Yet, the rise of lending growth due to mobile banking must be caused by other factors, right? Not necessarily. In addition to ease of use, most mobile banking apps are equipped with the ability to send push notifications and alerts to the user. In fact, the “2016 Special Report: What Millennials Expect from Their Banks” from Salesforce stated that “43% of millennials signed up for SMS alerts in 2016.” Members like these alerts because they give them the sense that the credit union is looking out for their best interests. The alerts drive adoption after the initial trial period is finished. It is important for credit union staff to be aware of the functionality provided by the software and mobile application in order to market mobile banking services effectively.
Also, it is important for credit unions to seek members who are more likely to use mobile banking. It’s not hard. In the same study from Salesforce, it was reported that “more than one-quarter (27%) of millennials are completely reliant on a mobile banking app.” Millennials are well versed in its features and comfortable filling out online lending applications from their phones. They are a great target market right now, and will certainly become a basis for future lending growth. Millennial members can be candidates for future loans over time. Already familiar with the system, they are more likely to apply for loans online. In fact, they almost expect it.
Possible Future Impacts
The future of mobile banking and lending growth remains to be seen. Many credit unions have already adopted mobile banking because of the impact on lending growth, so a hybrid concept may drive future growth. Companion applications with mortgage calculators, amortization schedules and various retirement account scenarios give millennials the ability to experiment with different loan amounts and payment terms. These companion apps could encourage other members to apply for loans as well, further driving lending growth.
Richard Gallagher is CEO of Oak Tree Business Systems, Inc. He can be reached at 800-537-9598 or ClientServices@OakTreeBiz.com.
