California Coast Credit Union’s website highlights its “personalized caring attention.”
You’ll find the “friendliest service you’ve ever experienced” at San Diego Metropolitan Credit Union, according to how it touts its offerings online.
Credit unions, finance’s not-for-profit institutions, often say their business model relies on the personal relationships they have with their customers.
As customers become more amenable to financial technology, locally based credit unions are working to balance that interest with other customers’ desire for more traditional banking relationships.
Stirring Growth
Cal Coast is the region’s oldest such locally based institution, but CEO Todd Lane isn’t letting the institution’s longevity mire it in pre-digital backwaters.
In fact, the credit union, which manages nearly $2.2 billion in assets for members in San Diego and Riverside counties, credits its efforts to offer customers the latest in financial technology as a factor in its continued growth.
Cal Coast’s assets under management increased nearly 11 percent year-over-year as of Sept. 30, 2016, compared with the end of the third quarter of 2015. Membership rose to nearly 147,000. The credit union added 16,826 new members in 2016, 22.1 percent more than the 13,732 members that joined in 2015. The number of people joining Cal Coast online versus in a branch continues to grow, Lane said.
As a nod to its founders, a group of educators, Cal Coast prides itself on providing financial education as well as services. Lane said that aspect of its operations played a role in the decision to research fintech tools that could make it easier for its members to manage their money.
Gamification Comes Into Play
In September, the credit union launched Coast Money Manager, a platform developed by Utah-based fintech startup MX Technologies Inc., and integrated it into Cal Coast’s banking platform. Members who use the money-management tool see a real-time snapshot of their personal finances.
Lane said Cal Coast decided to work with MX because members do better financially if they monitor their finances, but getting people to do so can be a hard sell.
The personal financial management software now available to Cal Coast customers has traditional budgeting capabilities made more intriguing via gamification, a technique intended to make potentially tedious tasks more engaging to users. While some money management platforms require users to set their own budgets per spending area — $100 per week on groceries, for example — Coast Money Manager sets them automatically based on prior spending. (Members may set different limits if preferred.)
Nearly 9,000 Cal Coast members are active users of the platform. Lane’s goal is 20 percent adoption, roughly double the typical rate for money management software.
The credit union says it wants to stay ahead of the curve when it comes to offering its members financial technologies.
Lane, who during a recent interview had an Echo Dot — the smaller version of Amazon’s voice-controlled smart device — on a side table in his Kearny Mesa office, is already considering how Cal Coast could integrate its services with such devices.
“You offer everything, and let the members choose what they’d like to use,” Lane said. “We’re allowing the members to choose how they do business with us.”
Small Institutions, Bigger Risks
Size does play a role in how experimental credit unions can be when it comes to technology: San Diego Metropolitan Credit Union, a smaller institution, has taken more of a wait-and-see approach, according to vice president of marketing and operations, Chris Lamb.
She and other executives at San Diego Metropolitan, which has about 17,000 local members, study what larger institutions are doing to get a sense for what might be a good option to get into a future budget.
“You can’t do everything in one year,” Lamb said.
Because technology is changing at such a rapid rate, it’s important to choose carefully, said Manix Phayvanh, the credit union’s marketing manager.
“We want to make sure it’s going to last,” he said.
The credit union has had online banking as an option for more than 20 years, with adoption growing steadily in recent years, Lamb said.
About 43 percent of its members use its online banking platform: As of November, nearly 7,500 hundred customers were doing so. The mobile app had roughly half that using it — with baby boomers, members age 51 to 69, the biggest fans, making up 37 percent of all users, Phayvanh said. (While use declines with age starting with the baby boomers, it doesn’t stop entirely; San Diego Metropolitan has 14 mobile users age 88 to age 100.)
Advocate for Change
Mission Federal Credit Union, by assets the second-largest credit union in San Diego County, is bringing someone on full time to handle its long-term tech strategy.
It is hiring for a new position: vice president of digital technology and strategy.
The credit union’s strategy for fulfilling its customers’ digital desires include keeping its existing technologies upgraded with the latest features, according to Rob Miller, chief operating officer.
In 2015, Mission Fed upgraded its online banking platform with more tools for budgeting and saving; in 2016, it redid its mobile banking platform, adding features such as fingerprint login and the ability for users to see their balance on their login screen, without needing to sign into the application.
“The feedback we’ve received on both has been very positive,” he said.
Mission Fed is bolstering digital offerings for its current customers while also preparing to satisfy the needs of Generation Z, the demographic cohort born after the millennials.
“They are really full-time digital users,” Miller said. Features the credit union plans to add to its digital offerings in the future include more card management features, such as card activation, the ability to block lost cards and open some accounts in real time.
In the meantime, however, Mission Fed recently found to its surprise that Generation Y, also known as the millennials, uses its branches nearly as much as its baby boomer customers — even though that demographic segment uses the credit union’s mobile platform more than any other.
The results of tracking customers’ interest in online and in-person banking are pushing it to continue expanding its physical infrastructure, too. Mission Fed opened two new locations in 2016 and plans to open at least one this year. (Cal Coast is taking a similar route; it plans to open one to two branches per year for the foreseeable future.)
“Our philosophy is, we want members to bank with us the way they want to bank with us,” said Miller with Mission Fed. “Sometimes it’s one or the other and sometimes it’s a combination of both. For us, it’s not an ‘either-or’ strategy; in some cases, it’s an ‘and’ strategy.”
The Mobile Movement
When it comes to digital channels, mobile is the future, according to Cal Coast’s Lane. The credit union has seen exponential growth in its members’ use of its mobile channel, beating out the credit union’s online banking platform as the channel of choice for those managing their finances remotely.
“This is driving our technology strategy today,” Lane said. How its site looks when it is being accessed on a mobile device drives the appearance of Cal Coast’s online banking site, not the other way around.
Mobile logins soared in 2016 to more than 916,000 compared with nearly 581,000 in the prior year, according to Cal Coast. Of the credit union’s nearly 164,000 accounts, just shy of 29 percent bank through a mobile device.
The use of mobile devices for banking is growing faster than online banking at San Diego Metropolitan, too, according to Phayvanh, the marketing manager. As a result, the credit union is looking into enhancing its mobile offerings, such adding push notifications, he said.
“We’re not early adopters, that’s for sure, but we are fast followers,” Phayvanh said.
San Diego County Credit Union, the county’s largest locally headquartered credit union, recently announced the launch of SDCCU Wallet, an application that allows its customers to get cash from its network of ATMs with an iPhone — no debit card needed. (The credit union says it will launch an Android version soon.)
While the application also gives customers access to coupons and deals, it’s the quicker access to cash spurring downloads, said Teresa Halleck, CEO and president of SDCCU.
“We constantly look for ways to leverage new technologies to help make our customers’ busy lives easier,” she said. “Customers are doing everything on their smartphones, and mobility and convenience are becoming key drivers to engaging customers.”
