Author: Amanda Reed

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Supercharging Credit Card Account Origination

PSCU

By: Scott P. Young, Vice President, Innovation and Design, PSCU

Consumer expectations are rapidly changing to reflect the latest technological and cultural shifts, and it is essential for credit unions to meet members where they are today in order to compete for tomorrow. Members are becoming increasingly accustomed to immediacy – whether that comes in the form of Amazon same-day or next-day shipping, Netflix on-demand streaming or Uber Eats food delivery – so it’s no surprise that members are beginning to expect immediacy from their financial partners as well.

In today’s digital-first world, any kind of a waiting period, even several days for the approval of a new credit card and several more for the delivery of a plastic, can be too long of a wait for many members. Enabling business processes to take place both digitally and instantaneously can help alleviate unnecessary friction while also meeting – and, ideally, exceeding – members’ expectations. This especially rings true surrounding the often lengthy process for account opening and credit card application approval.

There are three important areas to focus your efforts on when supercharging your credit card account origination strategy.

  1. Convenience
    Offering digital issuance of the credit card itself, once approved, is critical to meet the growing expectations of today’s consumer. Card credentials should be immediately generated and provisioned to a digital wallet, providing members with the ability to make purchases online or via mobile wallets right away. A physical card can follow in the mail soon after. The objective is immediate usage of the account. If consumers don’t find this level of immediacy and convenience with your credit union’s credit card account origination process, they may look at competitors’ solutions. 
  2. Personalization
    Typical credit card applications require consumers to manually enter an average of 30 fields of information. In today’s world, having to answer or input that much information is a deterrent that can lead to abandonment of the application and seeking to find a more convenient solution. Utilize technology to optimize the application experience with personalization – and significantly reduce the number of required fields with the pre-population of member data. Additionally, consider including the ability for consumers who are not yet members to apply for credit union membership as a part of the credit card application process.
  3. SecurityMany fintechs and credit union service organizations (CUSOs) have advanced identity verification technology, allowing members to quickly and easily apply for credit cards from anywhere and be approved instantly. This proprietary technology can simplify the security process for many applicants and reduce the need to participate in additional verification steps like uploading a photo of their driver’s license or passport. Too many unnecessary steps can create friction – causing credit card applications to be abandoned before completion.

Leveraging technology to create a more convenient, personalized and secure credit card origination experience might be too much to do on your own. Consider partnering with a fintech or a CUSO to help meet your goal. For example, PSCU has just partnered with Amount, a fintech focused on next-generation digital account opening, lending and buy-now, pay-later (BNPL) solutions for some of today’s larger financial institutions. With this new partnership, PSCU and Amount will soon provide credit unions with digital account origination technology through an innovative platform that delivers the digital experience many members are seeking today.

Easy is the new loyalty. Make the experience of a credit card application and approval so simple that it is too good for members to pass up. If you demonstrate that the new account solution offered by your credit union is convenient, with immediate access to spend, your members will be more likely to look to you to meet other financial needs as well.

Scott P. Young oversees the Innovation, Design and Integration Teams at PSCU. With over twenty-five years of experience in payments, Scott started his career at First Data in Omaha before moving to Pentagon Federal Credit Union (PenFed) and more recently, Bank-Fund Staff Federal Credit Union, before joining PSCU in late 2019. A passionate advocate for the credit union movement, Scott is also a leader in Diversity, Equity and Inclusion (DEI) efforts at PSCU and across the industry. Scott is a graduate of the University of Nebraska.

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How to unlock the power of data while protecting it

mastercard logo
BY TANAY DAVIS

Data is more valuable than ever — which means, more than ever, it needs to be protected.

From the rise of open banking, which enables people to share their financial data to access more choice and better experiences, to the growing desire of companies across industries to harness data to make smarter decisions and create new revenue streams, data security is key.

In the latest episode of “What’s Next In,” Mastercard’s podcast that informally explores technology, innovation and ideas, host Vicki Hyman discusses the evolution of privacy-enhancing technologies with Bob Schukai, Mastercard’s executive vice president for Technology Development, Global Open Banking, and Ellison Anne Williams, the founder and CEO of Enveil, the startup that uses homomorphic encryption to secure data while it’s being used to allow companies to innovate while protecting and respecting individual privacy.

“Privacy-enhancing technologies enable a decentralized form of data usage, collaboration and monetization to be possible,” Williams says. “These technologies leave the data at the point of origination and enable usage of that data in a secure and private way without having to move or replicate it.”

Mastercard’s privacy by design principles ensure that privacy safeguards are built into the design and creation of everything the company does, Schukai says. “We believe that your personal information is just that, it’s personal and we try to take great care to ensure it stays that way.”

To hear more from Schukai and Williams, subscribe to “What’s Next In” on Apple Podcasts or stream it directly in the player above.

TANAY DAVIS, ASSOCIATE SPECIALIST, GLOBAL COMMUNICATIONS
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Improving Member Retention with a Better Digital Experience

Talking Mortgage

Credit unions have an advantage over other lenders when it comes to retention. But
to keep members happy over the long term, you need to meet them wherever they
are.

Topics include:

  • How digital servicing tools have moved from optional to necessary.
  • How those tools have evolved to become more personal.
  • The importance of meeting members, specifically Millennials and Gen Z,
    where they are.
  • Security is the most essential puzzle piece.

Listen in as Jennifer Linamen of Black Knight discusses ways credit unions can use digital servicing tools to deepen and prolong member relationships.

https://www.podbean.com/ew/pb-vv4p6-12468da

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CU*SOUTH names Robert West as CEO

Robert West

June 15, 2022 –  The Credit Union Service Organization (CUSO) CU*SOUTH is excited to announce the appointment of their new Chief Executive Officer, Robert (Bob) West. A United States Air Force veteran, West’s extensive and impressive background leads him to the helm of CU*SOUTH with over 22 years of credit union and financial industry service with his most recent leadership position as Executive Vice President / Chief Information Officer of Members 1st Federal Credit Union. West also joins the CUSO with vast credit union core and other software products and solutions experience having served as Vice President of Client Operations Management at Fiserv from 2013-2018, as well as several other leadership roles.
“We are thrilled to not only have found the new CEO of CU*SOUTH,” states CU*SOUTH Board
Chairman and President/CEO of RVA Financial Credit Union Rick Preble, “but to have found a
highly qualified credit union advocate who exemplifies the leadership, vision, and drive to lead
our CUSO forward, understanding that by doing so will also lead our credit union partners and
the cuasterisk.com network forward as well.”

“I am honored and excited to be joining this great group of diverse and experienced professionals who truly care about their credit union partners’ success, going above and beyond to support all those who work at and with CU*SOUTH,” exclaims West. “I have been searching for a leadership opportunity that will allow me to utilize my years of experience while remaining in the credit union industry. I have found that fit within CU*SOUTH and look forward to bringing my passion for the credit union movement to the CUSO.”
West began his new role as CEO of CU*SOUTH on June 15, 2022. As part of the CU*Asterisk network with a community of over 350 credit union partners, CUSO-based CU*SOUTH was founded in July 2006, with a mission to grow credit unions. They do this by delivering an outstanding core software and support experience (CU*BASE), as well as by delivering Collaborative Services with fractional employees to support the credit unions in the CU*Asterisk network with accounting, collections, compliance, IT management and back-office support, and more.

 

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May Spending Trends: Credit Takes Flight

Co-Op Solutions

June 15, 2022 – Despite economic headwinds and mounting recessionary concerns, consumers are continuing to spend. Co-op’s May credit union card portfolio data showed stronger month over month results across most categories, while cardholders continued their year-long shift from debit to credit in an effort to preserve cash in light of increasing economic uncertainty.

Mixed economic data was the theme in May, as payrolls increased by a better-than-expected 390,000, keeping the unemployment rate steady at 3.6%, while initial unemployment claims reached their highest level since July 2021.

Of course, the biggest worry for consumers has been inflation. The Consumer Pricing Index continued its upward trajectory in May, hitting a new 40-year high of 8.6% on an annualized basis, driven by increases in gas, food and rental rates. This news reinforced expectations that the Federal Reserve would again raise its benchmark lending rate by half a percentage point at both its June and July meetings to curb runaway price increases.

These economic challenges are not limited to the U.S., as the World Bank recently warned of a growing global risk of “stagflation,” which it defines as “a protracted period of feeble growth and elevated inflation.”

Despite these worrisome macroeconomic trends, credit union members showed strong month over month spending growth in both credit and debit across most merchant categories in May (see table below).

Here are some of the key spending trends Co-op’s SmartGrowth consultants are watching closely:

#1: Home Improvement Continues Strong Growth Trend

Home improvement was up strongly in May in both credit and debit, showing double-digit increases in both count and amount over the prior month, as homeowners continued to invest in their current residences amidst the dual challenges of a hot real estate market and rising mortgage interest rates.

Looking at May 2022 year over year data, the home improvement category grew strongly in credit, with a 39% increase in count and 24% in amount versus May 2021. In contrast, year over year debit spend fell in the category by 8% in count, while rising in amount.

“Homeowners are doing smaller home improvement and renovation projects this year versus last year,” said John Patton, Co-op Senior Payments Advisor. “And given the economic uncertainty, they’re largely using credit to finance these projects, while preserving their savings to fund more significant renovations.”

#2: Long-term Shift to Credit Continues

With economic uncertainty and rising prices ruling the day, consumers are conserving their cash, driving a steady shift over time from debit to credit. Diverse merchant categories like gas, grocery and computers all showed triple-digit increases in credit year over year, while spending fell in debit for the same categories.

“An interesting trend is emerging between the payment types, it appears debit card users are pulling back on spend, possibly moving to credit for smaller, everyday purchases,” said Beth Phillips, Director at Co-op Solutions. “While, reserving their cash available for larger purchases, like home improvement, or to keep it on hand due to economic conditions.”

“People tend to save up and use cash for special events like major sporting events, season tickets and concerts,” said Patton. “This means that we’re seeing a lot of this spend on the debit side, in the month over month data, as opposed to credit.”

#3: Credit Balances Rise for Fifth Consecutive Month

After spending most of 2021 underwater, credit balances have increased steadily since the beginning of 2022 on a year over year basis. May 2022 showed the strongest growth trend yet, with 8.14% higher balances as compared with May 2021, a lift of nearly 1% over April 2022.

“As members use their credit cards more frequently, their balances will naturally grow,” said Patton. “They’re more likely to carry higher average balances and are less likely to pay off in full each month.”

What Credit Unions Should Do Now

As balances grow, credit unions should take this opportunity to analyze their members’ credit line usage patterns to best meet their needs.

“Research shows that when a card holder approaches a 30% utilization rate on their line, they will begin to pull back on using that specific credit card,” Phillips says. “Credit unions should engage with their member before that happens, by instituting a regular automatic line adjustment campaign.”

Month-Over-Month Category-Level Spending (Comparing May 2022 to April 2022)

Please note that the category spending below reflects month-over-month comparisons (rather than year-over-year) – i.e., compares May 2022 with April 2022, rather than May 2022 to May 2021.

  Credit Debit
  Count Amount Interchange Count Amount Interchange
Category Monthly Change Monthly Change Monthly Change Monthly Change Monthly Change Monthly Change
Amazon/Bookstores 4% 4% 5% 2% 2% 0%
Digital Goods 2% -3% -1% 3% -2% 2%
Dining and Entertainment 4% 7% 7% 4% 6% 5%
Education -6% 5% 3% -8% -5% -5%
Gas 8% 12% 15% 7% 10% 8%
Grocery 6% 6% 10% 5% 5% 5%
Lodging 11% 11% 10% 9% 6% 7%
Medical -5% -6% -5% -6% -7% -8%
Retail 5% 4% 7% 3% 1% 2%
Travel 5% 6% 7% 2% 2% 2%
Computers 1% -1% 5% 2% 1% -2%
Office 3% -6% -5% 5% 2% 3%
Campers & Camping 14% -1% -2% 16% -7% -8%
Home Improvement 21% 13% 14% 19% 15% 15%
Sport/Recreation 6% 2% 3% 2% 0% 0%

 More information on the Co-op SmartGrowth Consulting Team can be found here.

About Co-op Solutions

Co-op Solutions is the market-leading financial technology platform whose mission is to connect credit unions to the technology, strategic partnership and scale they need to best serve their members now and into the future. Co-op partners with credit unions to unlock their potential so they can compete; does the hard work of innovation, creating a one-stop opportunity to help credit unions grow; and offers knowledge and expertise in a world where everything must be integrated. For more information, visit coop.org.

Contact:
Bill Prichard, APR
Director, Public Relations
Co-op Solutions
(909) 532-9416
Bill.Prichard@coop.org