For credit unions, mobile wallets are as much a threat as an opportunity. In an effort to fight back, One Nevada Credit Union is working with several experts on CU Wallet, a credit union-focused mobile payments system.
"[Existing mobile wallets] may look harmless, you load your One Nevada card information and you have a convenient way to access payments. But the problem with that is more long term," says Paul Parrish, One Nevada's chief financial officer, during a Sept. 23 conference call. "Our members are going to be pecked away at with offers coming from our competitors."
All they need now is the right technology.
CU Wallet is founded by Paul Fiore, the founder of the bank technology vendor Digital Insight; Kirk Drake, the founder of Ongoing Operations, which provides continuity services for credit unions; and Richard Crone, a payments consultant.
Their goal is to maintain control of member data something the credit unions stand to lose if a third party's wallet owns the customer relationship.
"If you look at the currently available wallets, we don't think they are ready or operating in our best interest. All of them don't allow us to control our data's destiny," Parrish says. "If we had a chance to offer members a credit union centric wallet that would be as good or better than what is out there and be able to control the destiny of our data, to me that is a no-brainer."
Fifteen credit unions have signed on to offer CU Wallet, They range from $400 million to $5 billion in assets and represent 2 million members overall, Fiore says.
The founders are looking for a mobile technology company to power the wallet on a white label basis, Fiore says.
"Our mission is not to invest hundreds of millions of dollars in developing new technology," Fiore says, adding CU Wallet is looking to partner with a company that has experience with credit unions and can offer integrated mobile banking and payments as part of the same user experience.
The wallet will also be used as part of "buy local" payment campaigns, as a venue to deliver and execute special offers and loyalty programs, and as a way to drive national merchant and consumer campaigns, Fiore says, adding the existing national market of credit unions and members provides a readymade market for a mobile payments system.
"We don't want to just post a deposit to an account. That's a commoditized transaction," Fiore says. "Even though the credit union relationship with its members is sticky, it's important to attract new younger consumers such as millennials."
CU Wallet is the latest in a series of mobile payment initiatives that aim to give a specific industry competitive position in the digital wallet market. Others include Isis, which is operated by three major mobile carriers; and MCX, which is operated by merchants.
"We believe credit unions have the critical mass to drive a successful wallet," Fiore says, adding there are about 90 million credit union members nationally.