Technology for military banks and credit unions has come a long way from its first breakthrough in the mid-1980s.
Back then, the Department of Defense tasked the Association of Military Banks of America, or AMBA, with creating an ATM network that would let military families around the globe withdraw and deposit money from their accounts at home.
The Armed Forces Financial Network still exists, but now financial institutions are developing more advanced services for military personnel spread around the world, sometimes in remote locations. Those services include faster and cheaper ways to convert currency, customer assistance via chatbots and digital loans that rely on automated credit decisions.
“Banks like USAA and Armed Forces Bank are focused on trying to make that customer experience easy enough to use but not too easy to undermine the safety and security of their accounts,” said Steven Lepper, AMBA's chief executive. “That’s a delicate balance and the difficulty is compounded when you only have one bar on your phone.”
Service members face challenges that call for specialized solutions. They move frequently, have unpredictable schedules and are often far away from their home banks. Plus, the financial institutions with branches on military bases face rising rents when they renew their leases. These realities have led many financial institutions to seek more digital means of interacting with customers in the armed forces, according to Lepper. As with civilian banking, the pandemic has only accelerated a reliance on digital.
In recent months, military-oriented banks and credit unions have rolled out products that use technology to uniquely serve their customers. For example, Andrews Federal Credit Union in Suitland, Maryland, has been tackling problems relating to currency conversions.
The credit union has domestic branches as well as locations in Belgium, Germany and the Netherlands. In foreign countries, it typically partners with local banks so it can process foreign payments for its members.
However, this extra step means payments take several business days, and Andrews must use an exchange rate set by the Department of Defense.
“We identified a need to better serve our member base,” said Rachel Rust, vice president of European operations for the $2.2 billion-asset Andrews. “How can they make payments in the same manner that a local would?”
In October, Andrews announced a partnership with the digital remittance service provider Wise. Now members can send payments in foreign currencies and see them credited immediately. They get an exchange rate that is 2 to 3 cents better than the DOD-established rate. The credit union will also use Wise to process payments using local currencies in situations where members have forgotten to pay a bill from their previous assignment but already closed their old on-base account in that country.
Stateside, the credit union spearheaded a more tech-heavy
Armed Forces Bank in Fort Leavenworth, Kansas, started a digital makeover in 2020 that continued into 2021. Its online and mobile banking features include Zelle transfers, mobile check deposit, card controls and a chatbot named Mili, which can help users get to a personal banker when needed. The company worked with the digital banking platform provider Q2 and digital customer service provider Glia to launch these tools. Glia lets financial institutions meet customers in a digital environment and transition between modes of communication, including voice, messaging and video conversations.
These changes were driven by necessity. The $1.2 billion-asset bank, whose parent company is Dickinson Financial, is located on 17 military installations in the U.S. But service members don’t always live on the base. Branch activity has declined over time, and the unpredictable military lifestyle called for the kind of flexibility that digital banking provides.
“We see that the military is not always in control of how they spend their day, and they don’t get a lot of notice for pivots and turns,” said Jodi Vickery, director of military consumer lending at Armed Forces Bank.
In 2021, the bank introduced its first fully digital loan, the
“When you bounce around every two to three years, you may have a straggling electric bill that doesn’t find its way to the next duty station, and you have a collection item on your credit report,” Vickery said.
Armed Forces Bank turned to MeridianLink, a company that helps financial institutions with digital lending, to help make loan decisions and deliver funding.
“We like that it has a high percentage of auto-decisioning capabilities,” Vickery said. “We’ve had clients go from application to money in their accounts in four to five minutes in the middle of the night.”
USAA has an even longer history of technological innovation. The San Antonio company, whose banking arm holds $117 billion of assets, started developing low-bandwidth versions of its mobile app and website in the early 2000s to accommodate members in remote locations with limited internet. USAA also says it
“At USAA, our culture and the very specific needs of our membership drive our innovation,” the company said in a statement.
Meanwhile, AMBA is exploring products that can help veterans safely manage their money. One company it is working with is Moca, an issuer of payment cards, that would let users deposit money on a debit card and protect those balances with extensive card controls.
“These products that enable you to guard your money are ones that we want to develop more for the military community,” Lepper said.
Some technologies originally focusing on military customers have spilled over into civilian banking. Remote deposit capture is a prime example.
“Now you almost can’t have a bank without being able to take a picture of your check,” Lepper said.
