In a blow to our economy unlike anything we’ve seen before, spending has plummeted across all payment methods and has impacted nearly every category, except for necessities such as groceries. Most financial institutions are reporting a double-digit decline in payments revenue, and as much as 80% of that decline could come from a loss in interchange revenue as opposed to interest income, according to Mark Sievewright, founder and CEO of Sievewright & Associates. And with the financial insecurity caused by widespread loss of jobs, many consumers who made regular deposits prior to the crisis no longer have the income to do so.
Unfortunately, once we emerge from the pandemic, there is no guarantee that your members’ debit card spending or deposit activity will pick back up at its previous levels. Megabanks, other credit unions, digital-only institutions and other payment players are leveraging this unprecedented event to win over your members. If your members weren’t fully onboarded and engaged with your credit union before the crisis, chances are they didn’t view you as their primary financial institution and could likely end up as another attrition statistic.
A successfully onboarded account holder will generate more deposit activity, use more products and services with your institution, transact more heavily and stay with you longer. Research has proven that the level of engagement closely correlates with the profitability of checking accounts. But your account holders won’t generate profitable activity until they’re fully onboarded and committed to your credit union as their primary financial institution. Savvy credit union executives know that now is the time to reengage your members and revive transactional activity. These executives know that initial account acquisition is only the first step in an effective account strategy and must be followed by onboarding, engagement and retention efforts for ultimate success.
For more information, download our free white paper, Part II of Velocity Solutions Credit Union Recovery Series: Revive and Reengage Member Swiping & Deposit Activity.