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Banking And Finance
Local banks, credit unions keep pace with growing interest in mobile banking

Click To Expand (Graphic by Rodika Tollefson)If you’re one of those people who whip out their smartphones while standing in the grocery line and transfer money between two accounts before getting to the checkout, you’re in good company. A Federal Reserve report released in March estimates that 50 percent of smartphone owners used mobile banking in 2012 (a 33 percent increase from a year before) — and transferring between accounts is the second-most common use, after checking balances and recent transactions.

While large national banks started offering mobile banking several years ago, local and community banks and credit unions are quickly catching up. Two years ago, some offered mobile banking through web browsers. Last year, however, several rolled out mobile apps, and others are following suit this year or actively exploring options.

“It has been a hot topic behind the scenes. We talk about that generation that’s coming into banking and we hear from clients they want mobile apps,” said Jennifer Carrier, Liberty Bank assistant vice president and branch manager. “On the other side, there’s the risk factor with fraud and as a small bank, it’s harder to deal with fraud losses. But we believe that’s the way things are going.”

Mobile Banking AppsThe generation that’s coming into banking, digital natives and the millennials (aka Gen Y), are indeed driving adoption. According to the same Fed survey, people age 18 to 29 make up the largest category of mobile users, at nearly 40 percent. Gen X is not far behind — 34 percent of people who use mobile banking are in the 30 to 44 age category.

“For younger customers and early adopters, banking via mobile apps is second nature,” said David Devine, senior vice president and marketing director for Tacoma-based Columbia Bank, which has branches all over the Kitsap Peninsula. “But others are just entering mobile and their worries include security; it’s a new technology and folks are skeptical until they start using it.”

Columbia introduced a new mobile suite last September that includes apps for iOS and Android platforms, while it previously had web-based mobile banking. App features include bill payment and a GPS-based branch locator, and the bank has been actively promoting the new suite — last year, for example, it had a “keep mobile” campaign that included gas card giveaways.

Devine thinks the adoption of mobile banking is much faster than online banking was as a new technology for two reasons: Smartphones are cheaper devices than computers and people are already used to accessing information and conducting transactions electronically.

“Now that smartphones are becoming ubiquitous, I think adoption is going to grow exponentially,” he said.

Peninsula Credit Union, which is based in Shelton and includes branches in Belfair, Port Orchard and Poulsbo, is planning to launch a mobile app this summer, as early as June. Features will include bill pay, person-to-person payments via PayPal (integrated into the app) and geolocation-based services for locating not only PCU branches and ATMs but also credit unions that are part of the “shared branch” network and ATMs that are part of a co-op agreement.

“People pretty much expect (mobile) for a variety of reasons, probably largely because of their schedules,” said Peninsula Credit Union CEO Jim Morrell. “It’s one of those convenience factors.”

Up-and-coming: Mobile deposit

JP Morgan Chase may be the one responsible for giving consumers the idea they don’t have to go to a branch anymore to deposit checks — thanks, in part, to its widely distributed television commercials a year or two ago. Who doesn’t remember the proud husband bragging about being able to make a deposit from any room of the house?

“We’re actively looking at this feature internally. We have more people asking about it,” said Jeff Wells, e-business manager at Kitsap Credit Union, whose app includes GPS branch locator, reward programs and, as of a couple months ago, bill pay.

Kitsap CU sends out regular surveys to its members and uses the thousands of responses to decide on new services. It was member response, in fact, that prompted much faster rollout of mobile apps, said Leah Olson, vide president of marketing. Currently, the Bremerton-based credit union has about 9,000 active mobile banking users, more of them on iPhones than Android phones. (SMS transactions are also popular — in March, the credit union saw 41,000 text messages through its SMS banking system.)

The most recent questionnaire that went out is asking members if they’re interested in remote deposit. “We want to know what the adoption rate may be for new products,” Wells said.

Sound Credit Union (based in Tacoma and with branches in Gig Harbor/Key Peninsula) saw more than $1 million in mobile deposits in March, a number that’s been growing since the feature was introduced in December. The mobile app, launched last September, also has features such as bill pay and branch locator and maps.

“Mobile has been our fastest-growing channel,” said chief marketing officer Robyn LaChance. “We really work hard to keep our eyes on technology. It’s changing so fast, but it’s exciting.”

Kitsap Bank’s app, which was rolled out in November for the iPhone and Android, will include mobile deposit this June or July. Chief information officer Jackie McVay said there’s a lot of going on behind the scenes before new features can be added.

“There’s a lot of security that goes into making sure fraud doesn’t occur, so we do extensive testing before rolling out features,” she said.

She said mobile banking is a complimentary product, just another way for customers to interact with their bank — but even so, she expects to see more and more of those types of services.

“I believe as PCs become obsolete and we go more to tablets and mobile devices, we’re digitizing more services. It will become more of a norm than add-on,” she said.

New Trends

Other mobile features some of the local financial institutions are considering include person-to-person payments, loan applications and so-called mobile wallet, the ability to use your phone to pay for goods and services. But the behind-the-scene discussions are not only about new features and convenience.

Security, for example, has been a hot topic. The way Peninsula Credit Union is addressing that is through a feature that goes beyond the usual user name and password. When the mobile app becomes available in a couple of months, it will use a geolocation-based safety feature. Users will be able to set the parameters, such as their common location and radius, and those parameters will have to be met in order to access information via the phone. But members will be in full control, according to Morrell. For example, if they go on vacation, they’ll be able to set new coordinates.

Tablet use is another trend financial institutions are discussing. Kitsap Credit Union plans to introduce a tablet strategy later this year that takes advantage of the “real estate” that tablets offer.

“When you handle a smart phone, it’s more on the go and with one hand. With a tablet, it’s more relaxed so there’s a major difference,” Wells said.

KCU is also looking at so-called responsive design, a new way to design websites so they respond to different devices and screen sizes (by using a grid system for information architecture and adjusting the elements accordingly based on device).

“We recognize that our website needs to scale up and down depending on what device is accessing it, Olson said. “One individual might access our site via a smartphone and another with a gaming device or projector. With responsive design, we will be able to give an excellent experience no matter what device is used.”

No matter what new ideas and features technology brings, one trend is here to stay: Financial institutions want to meet and serve their customers no matter where they are.

“Folks want to do their banking whenever and wherever they can,” Devine said. “They want convenience.”

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