Credit Union Times - Centennial Edition - (Page I27) CeLeBrAtiNg 100 YeArS , SPeCiAL CeNteNNiAL editioN global Credit Union Access Network Unlikely By HeatHer anDersOn CU Times Correspondent-at-Large SAN DIEGO — Despite partnering with WOCCU and traveling to the opposite ends of the earth sharing her intellectual property, FSCC President/CEO Sarah Canepa Bang doesn’t have a global shared branching network in her sights. “I’m not saying it won’t ever happen, but especially with gas prices being as high as they are, I just don’t envision enough people regularly jetting back and forth to places like Ireland enough to need it,” Canepa Bang said. Instead, efforts are focused on increasing member access within each country, using a variety of channels like shared branching, ATMs and kiosks, mobile phone banking and more. In fact, Canepa Bang said she stopped referring to global access as merely branching or ATM networks years ago, opting instead to speak of, and think in terms of, shared access. “What we’re seeing is an exchange of information,” she said. “It’s that ‘if you had to do it all over again’ thinking, which we can share with our credit union friends in other countries.” FSCC and other shared access providers have been working with WOCCU to assist credit union movements abroad for years, said WOCCU Executive Vice President Brian Branch. He called shared branching a “standard piece of methodology” WOCCU recommends to up-andcoming credit union systems, because the strategy of competing with hundreds of access points versus just a few branches works on any continent. Efforts to expand shared access networks aren’t hampered by a lack of technology or geographical barriers. Rather, foreign credit union leaders face two challenges very familiar to their American peers: regulatory limitations and a lack of trust among institutions. The United States isn’t the only country with antiterrorist regulations like the PATRIOT Act, Branch said. Efforts to connect credit union systems within their own countries, not to mention to with each other, Sarah Canepa Bang eration. Not only must a credit union open up its brick and mortar operations to other credit union members on the acquirer’s side, the institution’s leaders also have to trust that the credit union on the issuer end won’t steal members. “How more cooperative can you get than [shared branching]?” the FSCC president said. “I hear so much about how credit unions don’t cooperate with each other. If you look at shared branching now compared to 10 years ago, that tells me we are cooperating. You don’t cooperate to go to nice parties and annual meetings; you cooperate to support credit union members. Cooperation works because putting members first works.” Branch said a desire to provide remittances services helped many credit union systems overcome their hesitancies toward shared M-PESA, a service launced in networks. Kenya in 2005 as a partnership between European tele“Remittances communications companies require one cenSafaricom and Vodafone, tral point to come into the country, offers wallet services through its mobile phones. Customers and then funds can load value onto their are distributed phones and use it for placing out from there. So calls, paying bills, buying for the first time, goods and withdrawing cash. credit unions saw a good business case for cooperating,” the WOCCU executive vice president said. “Then, after that positive experience, they saw other ways to work together. It wasn’t some philosophical, ‘we’re all brothers’ sort of thing, it was a good business case.” Canepa Bang said she’s particularly excited about the progress of shared access systems in China, where she visited in July 2007 to share technology and best practices. By the time she returned to China one year later, they had already linked 16 branches. “We’re giving them our technology, because I recognize we’d only do two to three transactions to China per year, which isn’t a reason to pick up the switch and own the transaction,” she said. “Unlike other technological endeavors, the IP [intellectual property] is less important than the network itself. How we connect up is FSCC’s secret sauce, but it’s not really that big of a secret,” she continued. “I will give my specs to practically anybody, because in the end, good luck trying to start a shared branch network. You can set up the technology, but it’s not worth anything if you don’t have any credit unions connected to it.” While shared branching networks are picking up steam in China, Ecuador and Puerto Rico, alternate access methods are achieving market dominance elsewhere, Branch said. In India, Kenya, Mexico and Rwanda, credit union systems have partnered with point-ofservice networks at neighborhood stores, allowing members to make purchases, withdrawals and deposits with a POS card at the register. “It’s been great for credit unions with members in rural areas, who travel into cities to sell their goods at market, then travel home with a considerable amount of cash on them,” Branch said. “Now, with the POS networks, they can deposit the cash there, and travel home without risk of being robbed.” Mobile phone banking technology is catching on much faster in other countries, with shoppers in other countries as far-flung as China, Sweden and Kenya using their phones to pay for everyday purchases, Canepa Bang said. However, payments are only one way to use mobile phones in the banking arena. Mobile phone companies in Kenya, South Africa and the Philippines allow customers to transfer the value of air time from one phone account to another, and even cash the time in at participating merchants for groceries and other goods, or currency. Because cell phones can be found even among the poorest of the poor these days, the practice caught on quickly, attracting four million customers in each country in less than five years. That caught the eye of regulators, who quickly realized the mobile phone companies were essentially offering deposit services, and clamped down with regulations. “Credit unions already have a license to take deposits and access liquidity sources, so WOCCU thought it would be a good opportunity to tie credit unions into the cell phone opportunities,” Branch said. Kenyan regulators encouraged experimentation at first, but thanks to the high adoption rate, have since put tighter controls on mobile phone account access, Branch said. The Philippines has been supportive, Branch said, but does have several anti-laundering and terrorism hoops to jump through. Other countries with large poor populations, like India, nixed the idea entirely, saying only financial institutions can enter the deposit business. Canepa Bang said she thinks cell phone-based banking transactions have a future all around the world, including in the U.S., and If you’re really serious about serving the underserved, you’ve got to go to mobile. People may not be able to afford the gas to drive to a branch, but everybody has a cell phone. —Sarah Canepa Bang have slowed considerably since Sept. 11, 2001, thanks to such laws. Ultimately, the greatest barrier to shared access networks is trust. “Frankly, we were stuck at the trust barrier for probably 10 years,” Branch said. “It was just impossible to get credit unions in other countries to trust each other.” Canepa Bang agreed, calling shared branching “where the rubber hits the road” when it comes to coopwww.cutimes.com Frankly, we were stuck at the trust barrier for probably 10 years. It was just impossible to get credit unions in other countries to trust each other. —Brian Branch said she’s concerned credit unions will lose out if bankers partner with cell phone providers to offer similar services here. “If you’re really serious about serving the underserved, you’ve got to go to mobile,” she said. “People may not be able to afford the gas to drive to a branch, but everybody has a cell phone. Our banking friends will soon realize they don’t need brick and mortar to serve folks, and once they figure out a way to provide profitable, convenient access to low-income people, what will be left for credit unions?” —handerson@cutimes.com Credit Union Times, December 2008 Brian Branch http://www.cutimes.com
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