By Bernard McLaughlin, President/CEO, Point Breeze Credit Union

The technology revolution, particularly smartphone innovations, is a major benefit to consumers, especially the unbanked and underbanked.

At least 2 billion people will access retail banking services via smartphones, tablets, PCs and smartwatches in 2018, up 10% from a year ago according to a new study by Juniper Research. And with a world population of 7.6 billion people, that means more than 25% of the planet is financially tech-connected and growing rapidly.

Think about a world where the internet eventually connects everyone: The upside numbers are staggering. Five billion more humans will eventually have internet connectivity, and both providers and users of financial services will prosper.

Digital conveniences eliminate the need for branch access and provide online account opening, bill payments, e-payment systems, digital currencies, e-statements and e-commerce sites; all of which are being embraced at double-digit growth rates around the globe.

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Even the most conservative financial industry supporters agree these tech changes, though disruptive, are exciting, game-changing developments.

How these changes will ultimately affect individual credit unions and banks is unknown.  And anyone who tells you that they know how it’s all going to play out is just another empty suit-consultant blowing smoke – by the way, no more advice on millennials please.

What we do know is that the technology revolution, particularly smartphone innovations, is a major benefit to consumers around the world.

Historically, most humans haven’t had access to credit, payment systems and avenues for worldwide trade and commerce. But all that has changed in the Digital Era. Gaining access to credit and a trustworthy payment system to collect and pay for goods and services makes it possible for the underbanked and unbanked to begin true wealth creation and meaningfully increase their standard of living.

Whether you weave baskets, farm the land or provide any other worthwhile product or service, through your smartphone you have access to the global market, credit and various payment systems offered by multiple service providers.

Past studies have shown that smartphone acceptance is higher among the poor, the unbanked and underbanked segments. According to a 2015 FDIC study, “Underbanked households continue to be more likely than fully banked households to use the mobile channel as their primary means of account access (12.6% versus 8.7%). These findings suggest, consistent with other FDIC research, that banks could use the mobile banking platform to increase economic inclusion.”

Proper education and business acumen will no doubt play a role in the success, speed and completeness of underbanked and unbanked tech adoption rates. However, instant access to a broader array of financial services and a marketplace where you can buy and sell your goods and services will greatly enhance the spread of wealth among the world’s entire population.

Credit unions and banks also win as they no longer are stuck as a paper-based, location-based service. The potential to reach more consumers—billions more—becomes possible. And the cost to acquire virtual customers is significantly cheaper. Have you checked your lobby and drive-thru transactions lately? Compare the year-over-year data for the last three years. It may surprise you. 

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It’s also a win for consumers as untethered e-commerce and virtual banking services become readily available to the world’s population. Financial services used to be all about physical location, face-to-face relationships and paper money. Customers had to play by the traditional rules that were established by a few. Today, however, you don’t even have to use a traditional bank, even for credit access. And if that isn’t enough to make your head spin, even world currencies are being challenged by virtual ones, such as Bitcoin and others using blockchain technology.

Financial Futurist Chris Skinner suggests that in this new financial world of buying and selling of goods to anyone, anytime, anywhere; batch to real-time processing, bringing you a 24/7/365 access to your money; and the advent of micro-lending and crowdsource funding, we have opened a whole new world for everyone to enjoy.

As a credit union executive, it is no doubt nice to see consumers, particularly the underbanked and unbanked, benefit from these new technologies. At the same time, many questions and challenges lie ahead. For example, how will these new technologies fit into your strategic planning? How are you going to incorporate these changes into your product mix?  Are your employees tech-savvy enough to keep up? Where does your company fit in? Will it survive?  

At Point Breeze Credit Union, we’re addressing these new realties by adding several more days to our management and board strategic planning schedule focusing on technological innovation. We have retained an outside tech company that consults with our team on all major technology deployments. In human resources, we are working to ensure our employees at all levels (including new hiring standards and training) have a minimum level of tech literacy.

These digital changes are real, meaningful and happening more quickly than you think. Address these challenges today before your credit union falls behind.

As for the financial services firms that survive, consumers, the underbanked and unbanked, this new world represents a tremendous financial opportunity never before possible – until now.