Data Find CUs Getting More Share Of Checking

Register now

ST. PETERSBURG, Fla.-In the wake of the CARD Act and new interchange rules, more credit union executives say now is the time to reel in checking business from banks.

PSCU's executive vice president of product management and technology says his CU has statistical proof confirming credit unions are growing their checking business and holding the line on pricing, while keeping rewards.

"In 2010 PSCU credit unions were running in the 1.5% growth range for checking accounts," said Tom Gandre. "We are now seeing 4% share draft account growth on our system, and it looks like we are tracking to close the year at that same level."

Gandre attributed last year's lower growth totals to CUs being preoccupied with the CARD act and Durbin Amendment. But he also attributes the checking increase to those same regulatory forces. "Credit unions are coming out of these final rules understanding that they have a big opportunity to get checking accounts from banks and are resisting the urge to reprice away from free checking. That has been our message as well to credit unions-now is the opportunity to take market share from banks."

Gandre noted that checking numbers have even ticked up slightly following the announcement of the new interchange guidelines.

Rewards To Stay

Debit rewards are not going away either, according to Gandre.

"We have a little over 30% of PSCU credit unions that have debit rewards and we have only seen two drop them. As the Durbin rules were being debated, I think credit unions were taking a 'wait-and-see' approach with debit rewards and now are looking to seize an opportunity, using rewards as an acquisition tool. We are seeing a lot of folks taking their debit rewards and combining them with an enterprise approach around loyalty, not to mention the merchant-funded play people are actively pursuing."

While the majority of CUs were on hold as the interchange rules were hashed out, a number of credit unions did not wait to beef up debit transactions to offset any potential revenue loss, Gandre said.

Well before the Fed announced its final interchange stance, PSCU was conducting 14 different debit penetration, activation and usage campaigns with 370 credit unions. The goal, Gandre said, was to prepare credit unions for a potential 20% drop in interchange revenue.

"Overall, credit unions in this group moved from a 62% debit activation rate to 67%, doubling their existing organic growth rate."

Gandre added that since the final interchange rule looks like it will not nick CUs much on interchange revenue, these 370 credit unions should see "a nice addition to ROA this year."

For reprint and licensing requests for this article, click here.