Finger On The PULSE. Sort Of
To the 300 Texas credit union and bank executives gathered here last week for the annual technology conference sponsored by their jointly owned electronic funds network, they could hardly tell that the conference's long-time sponsor PULSE EFT Association was no longer theirs.
Instead, it is now owned by financial conglomerate Morgan Stanley and its Discover Financial Services unit.
Even though the name of PULSE's annual tech show was changed four years ago to TechMecca, the last of the major independent EFT networks continues to be a co-sponsor with the Texas League and the Independent Bankers Association of Texas and many of the conference speakers were affiliated in some way with PULSE. But none of the speakers, including PULSE CEO Stan Paur, bothered to discuss the Discover takeover of the network or its ramifications during the conference.
Still, in rare comity, few of the credit union and bank executives who attended the conference had any idea of the future prospects of what was once their proprietary network, and many didn't even know of the sale to Discover.
"As far as I know, from the information we got from PULSE, it will stay the same. We won't see any effect," said Oscar McAnnally, an IT manager with SACU in San Antonio.
"I'm just happy it will provide us with a better level of services to our members. We didn't see a downside," said Lisa Wyman, a manager at Complex FCU, in Odessa, Texas, whose CU will receive a $5,000 share of the $311-million Discover buyout, even though it didn't vote on the deal.
"I was shocked; real shocked," said Wanda Reidy, accounting manager in charge of ATMs at Firstmark CU, San Antonio, of the end of cooperative structure of the EFT network. "It could be a good thing. We've been with PULSE for a long time and we know them very well." FCU will receive a $2-million share of the buyout. "There's a lot of different products and services we rely on for our members and we hope it remains the same."
The sale of the 25-year-old network to financial conglomerate Morgan Stanley drew nary a reference by Paur during his 45-minute speech to the conference. But afterwards, Paur insisted there will be little visible difference to users and financial institution participants after the integration.
Morgan Stanley/Discover has promised to preserve many of the things that made PULSE attractive, at least for the near-term, Paur told The Credit Union Journal. These include low switch fees for a period of three years; pricing preference; an oversight committee made up of participating institutions; as well as the same management team, headed by Paur.
After the announcement of the deal in November, many in the financial services industry saw the sale as a betrayal of values based on the network's cooperative structure, touted by PULSE as one of its major benefits to participants. But Paur said when approached by Discover the board of directors saw the deep pockets and market reach of Morgan Stanley/Discover as a great opportunity. It viewed it as one that gives participating credit unions and banks, "more choices in an increasingly competitive market," he said.
Discover, he said, plans to market its existing products and services through PULSE's 4,100 member institutions. The PULSE deal, he acknowledged, will also serve as an opportunity for Discover to expand its well-known credit card, which credit union and bank issuers of MasterCard and Visa had been restricted from doing until last year's court ruling striking down the two card associations' exclusivity clauses.
Among the first programs expected to be offered PULSE members through Discover are gift cards and credit card incentive programs, he said.