Bottom Line of The Future Means Developing Credit Union's Debit Card Business Model Today
DES MOINES, Iowa-Regardless of what happens in the fight over debit interchange, credit unions have to get started today with a strategy to make the debit card program viable into the future.
That is the opinion of Jeff Russell, EVP of The Members Group, who believes no matter what happens in the Durbin debate that the debit card business model will be modified in the coming years. Russell asserted that CUs must get more debit cards into more members' hands and get them active. "The non-interest income is great, but the strategy really focuses on cementing that relationship across the board, which debit can do. How do you get the entire wallet share of that relationship?"
Russell contended that remaining relevant in members' payment lives is the real issue facing credit unions. "Whether that's debit, prepaid cards that target the Hispanic market, working with employers to offer pay cards, or working with Dwolla. From our perspective payment mechanisms have become so much of a touch point for credit unions and their members."
Russell acknowledged the focus is long term, and may not have a big impact this year, but will protect the bottom line over the next five years or more. "It's not rocket science. It's about the business of remaining relevant," stated Russell, who added that CUs' have lost some of that natural affinity members had-and therefore relevance-by going to community charters.
"It can still be affinity, just a different type of affinity. We see credit unions aggressively pursue ways to improve their relevance with members, and we see many that are tentative. But, in my perspective, those that are tentative may not be around in five years."