Five trends that can shape your card programs in 2013
Amid all the talk about new technology and changing demographics, it’s easy to lose sight of this relevant fact: Credit and debit transactions drive non-interest revenue at your credit union. A great credit card plus a convenient checking account with debit is the one-two punch that wins primary financial institution (PFI) status.
This isn’t new, but it is news. Why? Recent trends are making credit a hot topic and placing new demands on your debit programs. If you’re looking to light a fire under your card programs, here are five trends to consider.
ONE: CREDIT IS UP!
According to TRK Advisors, consumers racked up $53.5 billion in credit card debt in 2012 – five times what they accumulated in 2010. Credit union card balances are up 4.6 percent since November 2011, according to CUNA Mutual Group – and that’s compared to growth of only 0.4 percent for the rest of the card market. Charge-offs are down: TRK estimates that they’re less than 3 percent. While the economy may not yet be in full swing, the credit outlook for consumers is definitely warming up.
There’s another way to recognize this trend: Visit your mailbox. The credit card offers that all but disappeared during the Great Recession are back – this time with sign-up bonuses, innovative reward programs and zero percent balance transfer offers. You can sit this round out, but you do so at your own peril. Major card issuers are – and will continue to be – courting your members.
TWO: MAKE THEM AN OFFER
Want to entice your members? Here are a few simple ideas:
Raise their limits. Your cardholders may be trying to keep their credit card usage well below their limits, so a raise may be appropriate even for members with credit to spare.
Manage risk, but look at opportunities to serve “credit bruised” consumers.
Ask them to transfer. Though zero percent offers may have peaked, there’s still opportunity to be had by offering low rates on transfers.
Give them rewards, and think about creating extra perks for multiple-account holders. Relationships should pay.
Make debit convenient with overall banking features that make account management a snap.
Get engaged. Issuing cards is only half the battle. Use analytics and a robust targeted marketing program to inspire usage and build loyalty.
THREE: CONSIDER THE ALTERNATIVES
Credit cards aren’t the only payment option that’s trending right now. Prepaid debit and secured credit cards are also sparking consumer interest. And new payment technologies – from PayPal to digital wallets, near-field communications (NFC) and mobile person-to-person (P2P) payments are capturing consumer attention.
What’s this to you? Right now, few cutting edge payment technologies have gained real traction. The time to act may be – well, later. But this is an excellent time to become conversant on new payment systems. (One suggestion: try out the Dunkin’ Donuts mobile app and eat something delicious in the name of research.)
To win loyalty on your debit cards, amplify the convenience features that go with your checking accounts. Nationwide ATM access, shared branching, member call centers – these aren’t payment innovations per se. But they do make managing a debit account more convenient. Also consider Sprig, which adds mobile banking and payment features using CO-OP’s shared branching switch. It’s available at no additional cost to shared branching members (to find out more about CO-OP Sprig, read “Member Perspective” starting on page 18).
FOUR: TEAM UP AGAINST FRAUD
In the run-up to U.S. EMV conversion, fraudsters are hard at work wreaking havoc with cardholder accounts. Though it’s not possible to stop fraud entirely, it’s a good idea to evaluate your fraud-fighting efforts. First, if you aren’t currently using real-time fraud detection, start now. In today’s environment, fraud happens in a matter of nanoseconds: Real-time fraud detection is the first best weapon against massive losses.
On a different front, credit unions should consider the ways in which they interface with members about fraud. Are you able to reach members quickly in the event of suspected fraud? Do you help members understand how fraud happens – and how your credit union is working to combat it? Do your processes leave members feeling supported, or violated?
A few quick tips:
- Ask members to update their contact information. Encourage them to enroll in text or mobile alerts.
- Urge members to monitor their accounts online.
- Make sure your communications convey that you’re fighting fraud on your members’ behalf.
- Help members cope: Offer instant-issue cards in the branch; suggest holding more than one card (debit and credit) so that if one is disabled the other is available; follow up to make sure issues are resolved fully.
FIVE: BUILD TRUST
The final issue to consider is one that underlies each of the other topics covered here: Trust. Cards are a perfect vehicle to communicate trust. You aren’t charging exorbitant fees and rates. You aren’t employing “gotcha” tactics. If you make your products and programs relevant, with current features and fair terms, and you offer the personalized, member-centric service that credit unions do best, you can challenge the competition on value and affinity. From there, building trust is an everyday thing.