Credit unions and community banks slow to offer mobile banking options may soon find this missing capability to be more than a mere annoyance to consumers.

Once considered cherries-on-top of traditional financial services, mobile banking and its big sister, online banking, are becoming less perk, more staple for consumers looking to switch financial institutions.

And switching, they are. While exact numbers are not yet available, anecdotal reports from FI associations across the country indicate that a fair number of consumers are dropping their big-bank relationships and heading for the people-focused, fee-free environments of community FIs.

But for every person who has switched, there are many more that have not. What’s keeping them from moving on? You guessed it.

Second only to the perceived pain of changing direct deposit is migrating from one online bill pay system to another. To many consumers, it’s a nightmare of epic proportions and not something for which they would volunteer.

Of course an FI can make great strides in the attraction of a frustrated public by establishing a painless transfer process. But those efforts won’t amount to a hill of beans for consumers who have grown dependent on their FI’s technology.

Therefore, the approach for FIs must be three-fold:

First, concentrate efforts on building sophisticated, customizable online and mobile banking tools.

Second, devote energy to developing an easy, painless way to transfer services between FIs.

Lastly, promote the heck out of it! The consumer is listening; they’re ready to switch. All they need is a gentle push – and easy online tools may be just the nudge they’re waiting for.

By guest blogger Kelly McDonald, president of McDonald Marketing and guest speaker at TMG’s upcoming 2010 Client Conference

The old “spray & pray” method of marketing – putting your message out there as broadly as possible and hoping to reach your prospects – no longer works.

What’s changed?

Three things: technology, product proliferation and cultural values.

Today’s technology makes it a snap for anyone to find like-minded individuals. Information is freely exchanged and widely available for free, any time of the day or night.

The second development that has changed the marketing arena is the sheer proliferation of products.

Take beverages, for example. We used to have a choice from a dozen kinds of drinks. Now, there are literally hundreds of choices – sports drinks, no-carb drinks, fruit drinks, organic juices, spritzers, energy drinks, flavored teas, vitamin water and even caffeinated water – all with new categories sprouting up every day.

Another key development that has affected marketing so drastically is the shift in our cultural values. Decades ago, our society and culture valued conformity. Today, individualism, self-expression and diversity are more appreciated.

This is where “marketing to people who are not like you” comes in.

Diversity marketing is the new norm, and this doesn’t simply mean racial diversity. Diversity comes in many forms, including gender, race, age, life stage, physical abilities, affluence, language preference, sexuality, nativity and hobbies or special interests.

By recognizing these differences and tailoring your product, message or marketing efforts to reflect consumers’ uniqueness, you are doing more than pitching a product. You are validating the importance of a consumer group.

In my next post, I’ll explore the concept of micro-marketing and how it can improve your financial institution’s reach. 

Kelly McDonald is a speaker at this year’s TMG Client Conference. Her session, “How to Connect with Others Regardless of Age, Wage or Lifestage,” will teach attendees how to grow relationships by better understanding neighbors, coworkers, customers and the community. Kelly has more than 20 years of global advertising agency experience. She started McDonald Marketing in 2002.

Heeding the prediction that the pace of credit union mergers is expected to continue in 2010, two TMG experts have just released a paper on card services management during a merger.

Co-authored by TMG’s Aris Jerahian and Brian Scott, the paper shares tips on evaluating the card portfolios of merging credit unions for profitability and growth potential.

Aris and Brian also discuss the little-known benefits of consolidating card services with one processing vendor.

Below is small excerpt from the paper, which can be downloaded for free here.

The financial service industry has seen its share of upheaval, and credit unions are no strangers to the changes our economic climate, regulatory environment and compliance agencies have imparted on the day-to-day business of serving members.

But, what smart credit unions have discovered is that along with change comes an opportunity to rebrand, reposition and generally enhance services in a way that makes their institution stand out from the rest.

This paper and several others can be downloaded here.

I got into a Twitter conversation the other day with Ohio credit union @DirectionsCU about the importance of financial education for teens.

As it turns out, the CU spent more than 300 hours in 2009 educating nearly 3,000 participants from children to senior citizens on the ways and means of financial responsibility.

The CU’s volunteer initiative comes at a time when legislatures – including its own Ohio General Assembly – are mandating financial education for public high school students.

While they require a significant time and resources investment, financial education projects like those led by Directions CU benefit a community FI in at least two important ways.

First, when guided by a relevant curriculum, the programs boost the financial savvy of current and potential customers, putting the FI in a better position to enjoy a responsible customer base.

Second, the initiatives provide outstanding public relations opportunities for the hosting FI.

Local news media covering the financial crisis are looking for local angles on this national story. And FIs leading their communities’ improvement can serve as ideal sources for these news outlets.

According to @DirectionsCU, their local reporters were all over the story, covering the CU’s education initiatives in both print and broadcast media.

It’s a classic win-win for the FI and its community.

Last month when the East Coast was getting hammered by snow storms, the national morning shows aired segments on everything from how to shovel to preparing an emergency kit.

As a born-and-raised Midwesterner, the concept of devoting air time to what are life-skill basics to us in the Heartland seemed silly.

Credit union veterans likely feel the same way as national media continue to feature stories on the basics of financial responsibility as though it’s “news.” To them, due diligence, fair pricing and thrift are simply rudimentary.

But just as I found empathy for my coastal counterparts – who don’t have a lifetime’s worth of experience to draw on when weathering a snow storm – credit unions must do the same. After all, for their members and prospects, financial responsibility will not always come naturally.

Launching financial education initiatives is a great way to both acknowledge and address the need for these consumers.

A second step – and the one in which CUs can begin to reap their own rewards – is supporting that financial education with responsible financial products.

By keeping credit card terms and fees fair and adding prepaid options to support members who may not be ready for the responsibility of credit, CUs not only grow their member’s chances for financial success – they grow their own, as well.

M-PESA, the person-to-person mobile payment network taking Kenya by storm, continues to grow, as the network now counts more than eight million subscribers among its customers.

And these eight million people, citizens of U.K. and Kenya, are transferring $300 million each month to one another with the help of 14,000 cash-in/cash-out locations.

Half of these transactions are reportedly valued at less than $10, more evidence that micropayments continue to represent what could become a very attractive market for network operators and their partners.

Another interesting development is that Kenyans are using their phones not only for immediate transfers, but to store their money, as well. While the average balance is only $3, the trend may be evidence of a growing comfort level with using a device as one’s own personal bank.

Thanks to Digital Money Forum for the stats and the great blog post. Great place for keeping up with this emerging network.

…they travel down the path of least resistance. And when it comes to protecting cardholders, the U.S. may soon find itself the gateway to that path.

As payments networks the world over migrate to chip-and-PIN technology, making measurable dents in a global fraud epidemic, will the U.S. become more vulnerable?

The reason this technology reportedly works so well is because the only element – human or otherwise – that knows a cardholder’s PIN is a chip embedded in the plastic.

The setup requires a specific type of POS and supporting software, which is costly and partly to blame for the U.S.’s lack of interest in implementing the technology stateside. With merchants already up in arms about interchange costs, the last thing they are looking to support is a nationwide change in payments system infrastructure.

Financial institutions aren’t terribly motivated to adopt the news system either. Large FIs have traditionally viewed fraud loses as a cost of doing business, believing that as long as losses don’t increase too much it’s acceptable.

Another argument against chip-and-PIN in the U.S. is that our country has been to-date substantially less victimized by card fraud than other countries.

But, as it becomes increasingly difficult to commit card fraud abroad, will that change?

Less worrisome, but definitely irksome, is the potential for incompatibility for internationally traveling U.S. cardholders. Already we are witnessing an increase in the incidences of unusable plastic overseas, as Americans attempt to use their chipless plastic in foreign lands.

Jumping on the global bandwagon is hardly the American way, as we much prefer innovation to imitation. Payments technology leaders are no exception to this mindset, so it’ll be exciting to watch them blaze a new trail – hopefully one that blocks the aforementioned path so attractive to fraudsters.

Congratulations to TMG client First Community Federal Credit Union and credit card consultant Ondine Irving for their appearance on last night’s CBS Evening News with Katie Couric.

If you missed it, you can watch the complete segment here.

Crews from the news broadcast were on hand to interview Ondine (@CardAnalysis on Twitter). Asked by the show’s producers to select a credit union with an exemplary credit card program for the broadcast, Irving chose the $405 million First Community FCU.

Standing before a bank of First Community’s teller windows, Irving explained that the credit union had eliminated many of the fees associated with its credit card program. She added, “Credit unions can eliminate all that and still make a profit. And if credit unions can do it, the banks should be able to do it, too.”

With the help of Irving and TMG, First Community FCU recently restarted its credit card program after a sale of its portfolio more than five years ago. The CU’s new program offers its 50,000 members a choice between four VISA-branded credit cards, including a Platinum rewards card with a fixed rate as low as 8.9%. There are no annual fees associated with any of the cards.

Many financial institutions rely on set fraud strategies that remain untouched for years. But when it comes to card fraud, a “set it and forget it” philosophy can result in serious losses.

Because every FI and every FI’s cardholder base is different, customization of fraud prevention tactics is vital. Real-time loss prevention technologies are out there, and every card-issuing FI should be evaluating them for their varying degree of flexibility.

What you are looking for is the ability to make immediate changes. You want a technology that enters every credit and debit card transaction into a scoring system immediately upon the swipe of the card.

But beyond technology, you must also look for the human expertise. Fraud strategists who are up-to-date on the most recent and sophisticated fraud crimes who can recommend the customized layers of protection, unique to your cardholders, are precisely the type of partners you need on your team.

Fascinating and high-tech tools for marketers debut nearly every day. Yet for many credit union marketers, they remain out of reach due to financial constraints.

But thanks to organizations like CUNA, credit unions with small mar-comm budgets can still take advantage of some of the advertising innovations available to the rest of the marketing world.

As the CU Times reported last month, CUNA is now making available turn-key “pop-up” Web videos for credit unions to use on their own Web sites at minimal expense. Reportedly, the cost will be less than $1,000 for a credit union to implement the 3D technology.

More details are promised at this month’s Governmental Affairs Conference. If you’re headed to the event, stop by CUNA’s booth and see if the new video tool can help your credit union’s marketing efforts.

While you’re at it, stop by to see TMG, as well. We’ll be in booth #332.