LAS VEGAS–How can credit unions prepare for a cardless future, or do they need to prepare for it at all?
From left, Chris Danvers, Kim Reedy and Carol Galizia.
Tackling those questions during the Underground Collision hosted by Mitchell Stankovic at Zappos’ headquarters were Chris Danvers, VP-digital strategy and payments with American Airlines FCU; Kim Reedy, EVP and CFO with OneAZ Credit Union, and Carol Galizia, president and CEO of LA Financial CU. The session was moderated by Jeremiah Lotz, managing VP-digital experience and payments products, with PSCU.
Here’s a look at the Q&A:
Lotz: Eighty percent of consumers have mobile smartphones. Do they still want a physical card, and what does it look like to have a consumer and perhaps a whole portfolio with no physical contact?
Danvers. I struggle with this idea of a careless future. To me a card payment is about two things: ubiquitous payment around the world, and exchange of value. At end of day all that physical piece of plastic does is let you use a set of card credentials in real time. I don’t think we have a cardless future. The value of a card payment is the network. There is a parallel between card payments and checks. The check was just a medium of exchange. We started writing fewer and fewer checks but we still used the same account credentials to exchange value.
Reedy: I’d like to put it back to the mission, the vision. It is all about the member. For us, our mission is to improve the lives of our members, our associates and the communities we serve. If it takes a phone to be able to buy the groceries, great. If it takes a card, fine.
We believe we need four components for our operating model to be successful:
- It’s always about the member
- Focus on serving Arizona and the submarkets
- Digital and digitized
- Our people
We had 157 million impressions from Google or Bing from the web. We also know we’ve had in Q3 6,000 loan apps that came in, about half of those mobile. Thirty percent of those were from the 24-34 age bracket, 10% from those age 18 to 24. Obviously, you have to have the analytics behind this. There are judgements.
Galizia: For us, it’s not so much a question of whether there is a cardless future. I think it will happen like anything else. I have six kids and they have no interest in physical cards. They Venmo each other for everything. So, for us the key thing is how do we make sure it’s our account tied to everything, not how did the transaction take place. We have talked internally about why do we even call it a checking account. Younger people don’t have any idea of a check register and balancing. They use apps to keep track.
Lotz: At times, we give consumers access to tools they don’t need. Are you able technology-wise to not give them a card, or do we do it because we simply don’t know how not to?
Danvers: It’s about choice. We had a strategic planning board session and we were talking about P2P payments and how some networks are growing quickly and we looked at data on certain generations’ preferences for payments via device. It’s about choice. It’s why checks still exist. There is still relevance for checks among some people.
Reedy: That is the crux. For years and years I viewed our strategic advantage as a credit union as this enormous war chest of low-cost funds in savings and checking accounts. For the first time in my life, I am very worried about that. Apple is very aggressive, and we don’t even need to talk about their capitalization. That’s what we need to talk about protecting.
Galizia: Does Venmo and PayPal offering a debit card take us out of the loop? What are we doing about it? Number one, it’s trust. It’s about integrity, products, leadership. But trust comes out number one. It’s a balance of meeting members’ needs and educating them that there are better ways and more secure ways.
Lotz: What do you need from partners in this space to help you succeed?
Danvers: I think there are lessons to be learned from the CU Wallet experience. It was a great concept at the wrong place in the food chain. What we need is our trusted business partners, whether it’s the processors or the payment rails, we need everyone to play nice together. More and more everyone’s business model is overlapping. It brings this weird new tension where people want to work together less. For us to have this work at the credit union level, people have to get past that.
Reedy: It seems model not traditional, not digital, it’s tra-digital. It’s the member who wants to be served wherever and whenever.