NEW ORLEANS-The opportunity in credit cards is going to get bigger, and so is the competition.
That's why CUs need to devise strategies to get more members using the credit union's card and battle the big banks that are stepping up their offers, insisted PSCU EVP Chuck Fagan.
During the CUNA Lending Council's 2011 Annual Conference, Fagan shared strategies CUs need to adopt to expand their presence in the credit card space. "Credit unions have 17% to 18% share of their members' credit card business. They have been hovering at this figure for a while. Look at the room for growth."
Credit card transactions and volume are both forecasted to rise over next few years (see chart). "Credit unions need to react and be front and center," said Fagan. "In a time when revenue is an issue, credit cards are often the highest ROA product--2% to 4% for well-managed programs--even with all the charge-offs over the last 12 to 18 months."
Fagan pointed to two overarching strategies that need to be heeded: "Protect your high-level card members and find out how to crack the code on Gens X and Y."
What will help CUs take on high-profile bank rewards programs is integrating credit card rewards throughout the credit union, giving rewards for use of more products and services. "Credit unions have to differentiate their rewards programs from banks' because they can't go tit-for-tat with the big programs," said Fagan.
Other key points Fagan shared:
• Understand what is coming down the path of mobile, because mobile is coming fast.
• Get a team in the CU to stay on top of credit card competition.
• Focus on two types of cards, one that is rate driven and one that offers rewards.
• Price to the member risk level-account-level pricing has to occur.
• Segment product messages.
• Have one executive take ownership for the card product, and the person must be empowered.
"An empowered product owner is the most powerful contributor we have seen to a high-performing portfolio," said Fagan.
