Credit unions get hotter with cool
electronic gadgets and wireless services
By Pat Curry • Bankrate.com

You're out for a quick soup and salad when your pager goes off. It's the credit union with a message that your direct deposit just hit your account. Now you can use your debit card to pay for lunch.

You're at Home Depot to pick up a few little things to fix a drippy faucet but there, all around you, are things you always wanted in your house. You pull out your Palm Pilot and punch in a few numbers. By the time you overload your cart the credit union has approved your application for a home equity loan.

Scenes such as these are not just wishful thinking any more.

Like banks and other financial institutions, credit unions are pursuing a host of electronic avenues to attract and retain their members.

"The majority of large credit unions are looking to increase their electronic interfacing," says Doug Benzine, vice president of electronic commerce solutions for the Credit Union National Association and Affiliates. "They start with banking, add electronic bill paying, then automated lending solutions, loan scoring and decisioning, and e-statements. That's kind of the foundation for electronic applications."

Quickly going electronic
Since the first credit union Web site went live in 1995, more than a third of the nation's 11,000 credit unions have created a Web presence. As of June 2000, nearly two-thirds of all credit union members have access to online banking, according to Callahan and Associates, a Washington, D.C., consulting firm that specializes in the credit union industry.

And they're not just logging on to check their account balances. Many credit unions offer the ability to transfer funds from one account to another, pay bills, order checks and receive e-statements online.

Account aggregation is one of the buzzwords in the business; several credit unions are beta testing this feature, which gives members the ability to manage all their financial accounts in one location instead of clicking from one Web site to another.

"The relationship is moving online more and more," says Ray Springsteen, business development manager with Callahan and Associates. "We have the ability to have live chats with members online. It's the way a lot of members want to do business."

Next up may be the availability of "smart cards" to which members can add or remove cash or services the way they now add extra minutes to prepaid phone cards. "The goal is to eliminate 18 different plastic cards in your wallet and use one," Benzine says. "You put all your cards on one and identify which account you want to use."

What the members want
Ball State Federal Credit Union in Muncie, Ind., is a new player to online banking. Its members -- staff, students and alumni of Ball State University -- responded quickly and favorably to the service, CEO Randy Glassburn says. His members love being able to check balances and account histories, and move money from one account to another without giving up a campus parking space to drive to the credit union.

"I think people just want the basics," he says. "They just want to zap in there and see if their direct payroll got deposited, move some money around, stick some money in their Christmas club and log off."

Don't tell that to the members at First Technology Credit Union in Beaverton, Ore., whose members include Microsoft employees. First Tech had computerized home banking in 1990, years before 'www-dot' became a household phrase.

"Our field of membership is high-tech companies in the Northwest," says Mike Scheuerman, chief technology officer for First Technology. "From that point of view, they want the latest and greatest in terms of gadgets. They're all toy users. They have a vision of how they should be used. We're in the process of alpha testing our wireless access to home banking and bill payer services. We asked members, 'If we provided this, would you use it?' and 80 percent of them said yes. Eighty percent of those said, 'I want it now.' Then they came back and asked, 'What about my pager? How can I use that?' We did a call for beta testers for account aggregation. I had 100 people sign up in a week."

Got to play to survive
Patelco Credit Union in San Francisco began offering online banking services for two reasons, says senior vice president of marketing Anita Macias.

"Survival and demand," she says. "One goes hand in hand with the other. It was apparent when the Internet hit and the virtual banks cropped up, we had to be in that game."

It's worked. Out of 186,000 members, 50,000 are using Patelco's PC-24 home banking regularly. In addition to PC-24, Patelco has a 24-hour call center, and offers e-mail, electronic seminars, e-statements and remote car loan applications.

"We're working on wireless and are beta testing that now," she says. "What we see as an organization is that everything will become remote."

The danger of remote access for credit unions is the possibility of losing one of their most important competitive advantages in the crowded financial services marketplace.

"It's not the homey atmosphere some credit unions would like to portray, to come in and have a cup of coffee and sit down with your hometown banker," Scheuerman says. "We attempt to brand ourselves as this is where you go if you want innovative security. It has sort of a different feel to it."

Competitive edges
Benzine called the issue a double-edged sword for credit unions as they try to find their place in their members' lives.

"If you enable your credit union member to go on the Web and see your loan rates, you're empowering them to check them at all institutions," he says. "So you need to provide service and give them tools they can't get somewhere else. Obviously, our rates are typically better. Our service is typically better and the privacy and security measures will be well above what you'll get somewhere else. Members don't have to worry about spamming. We're going down the line of personalization so they're getting the information they want anywhere, anytime, anyhow."

Springsteen says he thinks credit unions are so solidly focused on member service that remote access won't be a threat to their future. Some people will always come in to the branch to conduct their transactions face-to-face or call with their questions, and those relationships are secure. He sees the electronic applications as a way to capture a whole new segment of the marketplace.

"I would be much more likely to talk in an online chat than on the phone," he says. "I never talk to a person at the credit union. You're reaching another group of customers that do all their business on the Internet."

Pat Curry is a freelance writer based in Georgia

--Posted: Oct. 5, 1999