Building a robust credit card portfolio is integral to credit union health and growth. Credit cards represent three out of every four loan accounts, outpacing other loan product acquisitions by nearly 56 percent.1 And once US cardholders accumulate a credit balance, they are likely to carry that debt over time – for 25 percent of cardholders, it can take nearly a year or more to pay off the balance.2 That means consistent, guaranteed interest income for credit unions.
In fact, according to Accenture, $500 billion in global incremental payment revenue is available to tap over the next five years.3 With payments representing 80 percent of a consumer’s interactions with their financial institution, the time has come for credit unions to make payments the center of the Primary Financial Relationship (PFR).4
While a high-performing credit card program can bolster revenue and help cement long-term member relationships, the active management of such a program offers its share of headaches. Card managers face multiple issues, questions and decisions daily – and increasingly feel the pressure to respond quickly. Executives must continually evaluate costs and returns on investment, project future trends, and identify, build or secure the resources needed to optimize the card program.
Research on consumer behavior shows that member expectations are evolving. Today’s consumers are looking to their PFRs to provide leading-edge card programs that are tailored to their specific wants and needs. According to a research study performed by EY and reported in the CU PaymentsOutlook white paper from CO-OP Financial Services, 7 out of 10 respondents owned at least one payment product. In addition, 50 percent would approach their PFR provider as the first place to shop for a new digital payment product.5 These members expect a digital-first experience, personalized offers and expert guidance from a financial institution that understands them as individuals.
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