SAN JOSE, Calif. - Would you turn your members away and tell them to go to a bank instead? One credit union realized that is essentially what it did when it sold its credit card portfolio to a bank.
Alliance is one of many credit unions that sold the rights to its credit card portfolio years ago, and it is one of several that have brought this asset back in house. Emily Condon, the CU’s vice president of marketing and retail delivery, said there were many reasons to terminate the agent agreement with MBNA, which had purchased the $380-million credit union’s card portfolio in 2002.
“Our members were not happy with the level of service they were getting,” she recalled. “When members called with a question, we had to send them to MBNA. We were having trouble being a one-stop shop when credit cards were not ours. Because even though credit cards are a mature product, they are a great lead-off product.”
Other Concerns
Other concerns Alliance’s management had included a lack of input on marketing campaigns. Condon said MBNA would send an e-mail one week before scheduled launch asking the credit union to approve PDFs of marketing materials. “This was great if we approved, but not good if there was something we wanted to change,” she said.
In addition, MBNA began issuing American Express cards to Alliance members, on top of the credit and debit cards members already had.
“There was just an overall lack of control,” Condon assessed.
In the summer of 2006, Alliance knew its agreement with MBNA (which by that time had become affiliated with Bank of America) would be expiring at the end of July 2007. The decision to bring the card portfolio back in house was made during a managers’ meeting. Condon said management realized the CU could not process credit cards itself because it was not that large, so a processor needed to be found.
“After we gave the termination notice to MBNA/Bank of America, we were allowed to talk to processors to obtain information on their capabilities, pricing and other due diligence. I was not involved in the decision, but PSCU Financial Services was chosen,” Condon said.
It took several months to work out integration issues before Alliance had a soft launch of its branded credit cards in December 2007. An official product launch began in late March of this year. The CU’s tag line is “personal banking,” so the credit card was introduced with the slogan, “With personal banking comes a personal card.”
‘I Know Where Waldo Is’
To emphasize the “personal” aspect, employees wore T-shirts with catchy phrases expressing individuality, including, “I know where Waldo is,” “I make a mean Bundt cake,” “I’m big in Japan” and “I’m afraid of clowns.” The shirts were intended to spark conversations with members, Condon said.
From the soft launch to early May, Alliance has funded approximately 450 cards. Condon said the CU is taking things slow, relying largely on word of mouth generated by limited branch and website promotions.
“There was one direct-mail piece, but there has not been much in the way of traditional advertising yet. Anyone who has taken out a funded card receives a convenience check from PSCU. We anticipate having an activation promotion in October–either a promo rate, balance transfers or convenience checks–to get more usage out of the cards that are out there.”
Overall, Condon reported, getting back into the business of issuing credit cards is going well. “It is a great product to get someone engaged in the credit union. It removes a barrier and makes it easy to do business with us, and they don’t have to think about moving their checking account.”
Alliance is state chartered in California, and also has four offices in North Carolina. It serves 41,500 members.
