Red­wood keeps P2P ef­forts in house

Most con­sumers as­sume credit unions don’t have the same tech­no­log­i­cal ca­pa­bil­i­ties of big banks, but one credit union in Cal­i­for­nia is look­ing to change all that with a new of­fer­ing.

Credit Union Journal - - Front Page - BY W.B. KING

IN AN EF­FORT TO “WOW” MEM­BERS and cor­rect the mis­con­cep­tion that credit unions don’t of­fer com­pet­i­tive tech­nolo­gies, Red­wood Credit Union has de­vel­oped an in-house peer-topeer (P2P) so­lu­tion it calls Rcu­pay.

“We hope to help break down th­ese bar­ri­ers by of­fer­ing the bank­ing so­lu­tions and con­ve­nience peo­ple want and need,” said Red­wood Credit Union Ex­ec­u­tive Vice Pres­i­dent Ron Felder.

Ac­cord­ing to Early Warn­ing Ser­vices, a real-time pay­ment, au­then­ti­ca­tion, and risk mit­i­ga­tion firm, the P2P move­ment is grow­ing at a rapid pace. The com­pany noted in 2016 that the 20 credit unions and banks in its Zelle net­work pro­cessed more than 170 mil­lion P2P pay­ments. This equated to $55 bil­lion in trans­ac­tion value.

Cap­i­tal­iz­ing on this trend, the $3.5 bil­lion Santa Rosa, Calif.-based Red­wood CU de­cided to de­velop an in-house P2P so­lu­tion in early 2016.

“There were pri­mar­ily three de­vel­op­ers work­ing on Rcu­pay, with ad­di­tional project team mem­bers from com­pli­ance, pay­ments, mem­ber ex­pe­ri­ence, elec­tronic ser­vices, mar­ket­ing, qual­ity as­sur­ance and risk,” said Felder.

With 285,000 mem­bers, Red­wood has 72,000 ac­tive mo­bile app users. And while mil­len­ni­als con­sti­tute 20 per­cent of its mem­ber­ship, Felder said the so­lu­tion was con­ceived for the en­tire mem­ber base.

Rcu­pay is in­te­grated into Red­wood’s mo­bile bank­ing plat­form. Mem­bers can sign up on­line at the CU’S web­site and/or through the mo­bile app. The no cost, real-time pay­ments are sent via phone or email.

“One of our goals with Rcu­pay was to roll out a P2P sys­tem that will be used by our mem­bers in a sus­tain­able man­ner,” said Felder. “Rcu­pay was de­signed to be very cost-ef­fec­tive long-term with the un­der­stand­ing that RCU would have a large ini­tial in­vest­ment up front to de­velop the sys­tem in-house.”

Felder ex­plained that the pro­gram­ming ef­fort for Rcu­pay was pri­mar­ily com­pleted by the CU’S dig­i­tal bank­ing team as well as ad­di­tional pro­gram­ming by de­vel­op­ers that spe­cial­ize with its core plat­form.

“We also used an out­side firm to as­sess the risks and fea­si­bil­ity of de­vel­op­ing an in-house so­lu­tion,” said Felder ad­ding that all po­ten­tial se­cu­rity is­sues were also ad­dressed. “It was a big de­ci­sion, so we fully wanted to un­der­stand and ver­ify our de­ci­sion process.”

Among the ben­e­fits of de­vel­op­ing the so­lu­tion in-house was the abil­ity to fully cus­tom­ize the mem­ber ex­pe­ri­ence, and there is no re­quire­ment to sign-up for a third party ser­vice.

“Red­wood Credit Union has a large pen­e­tra­tion in the North Bay, and we felt a siz­able per­cent of the trans­ac­tions would be made from mem­ber to an­other mem­ber,” said Felder. “So it made sense to be able to make those in­stantly, rather than send­ing them out through a third-party, then back to our mem­ber.”

If the P2P trans­ac­tion is with an­other in­sti­tu­tion, Rcu­pay uti­lizes same-day ACH, which costs pen­nies per trans­ac­tion, noted Felder. “This makes the sys­tem very sus­tain­able from a cost per­spec­tive while de­liv­er­ing a ‘wow’ ex­pe­ri­ence that is fully in­te­grated into Red­wood Credit Union’s mo­bile bank­ing app.”

Since the May launch, Felder said ap­prox­i­mately 60 per­cent of Rcu­pay trans­ac­tions are to an­other mem­ber, and ap­prox­i­mately 40 per­cent are to peo­ple who bank at other fi­nan­cial in­sti­tu­tions. “We’re see­ing a steady in­crease in new users, and mul­ti­ple trans­ac­tions per user,” he said.

LESSONS LEARNED

Be­fore Rcu­pay was launched, Felder ex­plained, there was “ex­ten­sive test­ing” on the CU’S de­vel­op­ment servers. Next, Rcu­pay was moved to a user ac­cep­tance test­ing (UAT) en­vi­ron­ment where live trans­ac­tions were pro­cessed. Af­ter ad­e­quate test­ing, the so­lu­tion was of­fered to em­ploy­ees for live test­ing. But when the so­lu­tion was “soft” rolled out to mem­bers, there was a snafu.

“We dis­cov­ered an odd is­sue of han­dling emo­jis. We didn’t have a test case with an emoji as part of a con­tact stored on a phone,” said Felder. “The emoji caused is­sues when the con­tact in­for­ma­tion was pro­cessed in the sys­tem. For­tu­nately, we were able to find the root cause and re­lease a fix to the mo­bile app in a very short time­frame.”

With the emoji les­son learned, Felder said it is dif­fi­cult to think of “ev­ery use case” mem­bers will com­plete with any sys­tem or tech­nol­ogy.

“But as new use cases come up, we try to in­te­grate them into fu­ture test­ing sce­nar­ios,” said Felder. “Also, we take our mem­bers’ and em­ploy­ees’ feed­back se­ri­ously be­cause ul­ti­mately, this user feed­back helps us im­prove the ser­vice ex­pe­ri­ence.”

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