Rich Scholes knows firsthand how quickly new technology can make a difference, and the Ent Credit Union executive said the banking industry is working hard to keep up with an ever-changing world.
Scholes, a member of Ent’s C-level executive team, was licensing liaison at Stanford University’s Office of Technology Licensing from 1998-2003. When he started at Stanford, two students were in their second year of developing a project that became a startup company.
“At football games, they would put something about Google on the seats,” Scholes said. “I remember people saying, ‘What’s this Google thing?’”
Now, Google is so well known it’s also used as a verb, as in “Google it.”
Google led the way for other internet mainstays — and the latest is one that banks are paying attention to.
Venmo was created in 2009 by two University of Pennsylvania students who wanted an easy way to exchange money. It grew quickly and is now owned by PayPal.
“PayPal is old school,” Scholes said. “It’s not the popular cool thing like Venmo.”
On college campuses these days, students will say, “Venmo me,” as in, “Send me some cash.”
Venmo also offers a social experience with its people-to-people money transfers, but that’s not why the biggest banks and credit unions like Ent have developed their own technology for these types of financial transactions. It’s because customers are increasingly mobile and technology-driven, and people-to-people transfers are completed almost instantaneously. And the banks and credit unions don’t want Venmo and other fast money transfer companies to eat into their banking business. Ent has been offering member-to-member transfers since 2010.
“With mobile banking on the rise, most consumers are looking for a faster, safer and more convenient way to move money,” Thomas Naughton, Southern Colorado Region president of U.S. Bank, said in an email. “It’s not just for Millennials as many people are using their mobile devices for just about anything.”
U.S. Bank joined 19 of the country’s biggest financial institutions to roll out a program called Zelle — short for Gazelle, as in quick and agile — in response to the person-to-person payment upsurge.
Zelle launched in U.S. Bank’s mobile app and on its website in June.
Zelle also offers an Android and iOS app for users whose bank is not in the network, so customers who bank at 49 separate financial institutions can use Zelle. Transfers can only be made to other people who have the same capability.
“Zelle is a new, faster payments network backed by a large and growing number of the country’s most innovative financial institutions, including U.S. Bank,” Naughton said. “It provides consumers with the ability to quickly send their friends and family payments without ever leaving the security of U.S. Bank. U.S. Bank is committed to meeting the needs of consumers who are looking for new ways to pay. With Zelle, U.S. Bank delivers an innovative user experience that builds on our trusted relationships with consumers.”
Naughton said Zelle “can be used to send or receive money to or from almost anyone in the U.S., regardless of who they bank with, and money sent with Zelle is typically available to the recipient within minutes.”
Potential users can check the list of eligible banks at zellepay.com/get-started.
Connection may increase
Navy Federal Credit Union has offered member-to-member transfers since 2010 through its website and since 2013 with its app.
Neither Ent nor Navy Federal Credit Union are part of the Zelle network, but officials at both credit unions said that could change.
“Zelle is emerging as a likely standard because a lot of big banks are behind it,” said Scholes, who is Ent’s first chief experience officer. “We’re actively monitoring that. [Connecting with Zelle is] certainly on our radar.”
Tim Day, assistant vice president of digital channels at Navy Federal Credit Union, said member-to-member payments are particularly popular with younger generations.
“[Peer-to-peer] is already a mainstream activity among many people, particularly Millennials,” he said in an email. “This will only continue as more people become comfortable with technology, and as they have more options to send payments. Mobile is the No. 1 way that members interact with us on a daily basis. Our commitment to member service ensures we’ll continue to create new experiences to serve them on mobile and other devices they use frequently.”
Day said that over the last month, 40 percent of Navy Federal members have used mobile banking.
Scholes said that in September, Ent members made 318,879 transfers between accounts and that 93,447 of those (29.3 percent) were Ent members transferring to each other.
Ent is exploring methods of connecting with other banking institutions to make person-to-person payments possible, Scholes said.
“There is a lot of innovation in the payment space,” he said. “We thought the digital wallet would be the big thing for a while, and now there is Apple Pay, Android Pay and Samsung Pay. This all has less to do with businesses than it does with individuals sending money to each other. But it’s become very easy to send money.”
Before Zelle, the big banks’ system was called ClearXchange and it processed about $175 million in payments each day, according to a Los Angeles Times article, while Venmo was processing about $54 million a day in 2016.
As Ent works to keep up with technology, it has also rolled out a new interactive teller system at some branch drive-thru windows.
“It’s meant to personalize and replace the old system,” Scholes said. “You can stay in your vehicle and get a more personal experience.”
Scholes said that Millennials and those even younger crave speedy and easy technology.
“The younger generations want super computer speeds and they also want to be incredibly connected,” Scholes said. “We’re looking at ways to let people work with their money and seeing how easy we can make it.”
Smaller banks may not have the technology or the capital to embrace these new technologies, Scholes said.
“The volume of regulations have made banking safe and reliable but that also makes it complex and expensive,” he said. “Many may not have the funding in-house.”
Scholes said he thinks technology and the banking industry will continue to change quickly over the next decade.
“These are exciting times with all the tech tools out there,” he said.
Day said Navy Federal Credit Union is also working to keep up with the ever-changing times and give its members what they want.
“Our data shows that our members are mobile — so we look for ways to provide innovative mobile banking tools,” Day said. “Digital is changing the way consumers interact with banks and credit unions, and we fully expect this trend to continue in the future.”