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Financial Services Keep Pace with Consumer Expectations through Innovation

By Terry Rodrick, VP of Cards & Payments, First Tech Federal Credit Union

Terry Rodrick, VP of Cards & Payments, First Tech Federal Credit Union

Digital transformation has brought with it dramatic change in how people interact with businesses. This is especially true in the financial services industry—the way our financial institutions work with us is evolving quickly, and so is the way we pay for goods and services.

For one, banks and some credit unions are already offering real-time peer-to-peer (P2P) payment capabilities through the Zelle platform. Zelle allows customers to send and receive money securely and quickly, typically within minutes.

The response has been overwhelming. Since introducing Zelle last year, for example, First Tech Federal Credit Union has registered more than 30,000 users. The credit union currently sees more than $7 million move through Zelle every month, an amount that is growing steadily.

"Over the past few years, we’ve all seen the rollout of chip-embedded cards, which help protect against data breaches among other safeguards"

With a membership of tech-savvy users representing some of the world’s leading technology companies, First Tech is on the front lines of anticipating and meeting its members’ high expectations for innovation.P2P payment was a feature that First Tech members asked for—and a big advantage of Zelle over a third-party service is that it preserves users’ relationship to their financial institution.

And P2P is not the only trend gaining momentum in the financial services industry. Other emerging developments include:

• Contactless transactions—paying for goods and services using your smartphone rather than a bank card.
• Cardless cash—being able to get cash at an ATM with just your mobile app rather than having to use a card.
• Digital provisioning—using the functions of a newly issued card digitally and immediately, instead of waiting for the physical card to arrive in the mail.

Over the past few years, we’ve all seen the rollout of chip-embedded cards, which help protect against data breaches among other safeguards. Further physical changes are being introduced to cards themselves, even small upgrades like improving durability and putting numbers on the back to enhance security.

Customers also have come to expect a contemporary and feature-rich app for their online banking. First Tech too is rolling out a more intuitive and personalized portal, which will bring new self-serve features into members’ hands, such as travel notifications, spending controls, account balance notifications, and fraud alerts. With a smartphone, members now have the power of a bank branch in their pocket, 24/7/365.

Evolution behind the scenes

Credit unions and banks also stay relevant and engaging in ways customers don’t see. For instance, First Tech recently adopted a Pega business process management platform to improve a number of back-office functions that used to be done manually. Many decisions surrounding disputes and error resolution are now automated, resulting in a more seamless experience for customers. What’s more, First Tech uses artificial intelligence and machine learning to recognize patterns of fraudulent behavior so that it can more quickly detect and prevent financial crimes.

First Tech also is expanding its agreement with CO-OP Financial Services to process all its credit and debit payment services. Another factor in the move to CO-OP is its robust middleware interface, which will allow First Tech employees to manage the credit union’s portfolio in a more efficient way.

Balancing convenience with security

There’s no shortage of new offerings that can entice consumers. Even smart appliances have become a reality, where for example you can make purchases from your refrigerator, should you wish. Wearable tech also allows financial institutions to offer banking services through smart watches by Garmin and Fitbit, for example, and First Tech has been at the vanguard there too.

It becomes easy to envision a not-too-distant future in which customers use their voice-activated assistant—at home or even hands-free behind the wheel—to move money, check their balance or inquire when a recent payment was made.

These developments certainly attract customers with their convenience, speed, and simplicity—but with that also comes our responsibility to ensure privacy and security. As payment moves from coins and paper to an entirely digital framework, an enormous amount of data is gathered during the course of a transaction: where a customer makes a purchase, what’s being bought and when, and at what price.

On the one hand, this is a good thing, because it helps a financial institution understand which products and services would be of benefit to a user. But on the flip side, there is a healthy and justified amount of sensitivity around how much of this data is out there, who has it and how well it’s being protected.

Financial services consumers, just like in so many other realms today, want immediate gratification, they want personalized service, and they want it flawlessly. As leaders in the financial industry, we want to leverage technology to improve the experience for the people we serve. At the same time, we strive to deliver these innovations in a secure way. Only then can we truly be transformative leaders in the digital world.

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