Don't have a crystal ball in your CU? Don't worry. Here are five predictions from industry experts to ponder about the second half of the year.
1. More Members. The numbers of CU members in the United States will continue to climb, predicts Dave Colby, chief economist at CUNA Mutual Group. CUNA research found 1 million new members joined CUs in the first quarter. Although he doubts CUs can sustain such a pace, he said the larger question is: can CUs build a mutually beneficial relationship with these new people?
"Otherwise, they just become an expense," he said. "Membership growth needs to lead to products and services. If credit unions want to help new members, give them a loan with a better rate. Show the value of the credit union with a good rate. If someone has an 18% credit card, give them a card with 9%."
2. Increasing Reward Regs. Chris Joy, director of credit consulting for PSCU's Advisors Plus, St. Petersburg, Fla., noted that the Consumer Financial Protection Bureau, had had some discussions on adding more regulations on disclosures pertaining to rewards.
"We are watching the CFPB, because Director [Richard] Cordray has stated the bureau will look at rewards at some point, which may or may not mean 2014."A small reward to look forward to: Joy said the 10 basis points temporary interchange rate reduction mandated by the merchant credit card settlement should be rolling off the books by the fourth quarter. "This could mean more income," he said.
3. Possible Overdraft Rule Rewrite. Norm Patrick, director of debit consulting for PSCU's Advisors Plus, is keeping an eye on overdrafts for the second half of the year.
Two years ago there was a rewrite to Regulation E and members had to opt in to courtesy pay. Now, the CFPB has published a study on how banks were positioning their overdraft programs. Credit unions, unfortunately, were not involved in that study."
According to Patrick there is "some risk" that some type of rule could be drafted to further govern overdrafts. "We do not know any specifics, but there is revenue risk if something were to happen," he said.
4."Land Grab" in Payments. Doug Lokrantz, senior manager, innovation development for PSCU Financial Services predicted there will be more consolidation among emerging payments players, stating "It is a land grab right now as the companies try to get consumers," Lokrantz said.
"There will not be one winner on payments in 2014," he declared. "Right now, the market is trying to figure out what type of functionality merchants will use at point of sale. Near field communication has seen some penetration, but others are using bar codes. I do not believe one will emerge this year."
There will be more promotions as the land grab goes after consumers, according to Lokrantz. "The solutions providers will try to capture as many consumers as possible. Expect a marketing push by Visa, MasterCard and Isis."
5. Gold-Labeled Products. Gabe Krajicek, CEO of Austin, Texas-based BancVue, a wholesale financial services company, said companies such as his are benefitting from a demand from CUs and community banks for branded products. He said the acquisition of Simple by BBVA in February is an indicator of the future.
"Simple is a slick online mobile banking program," Krajicek said, noting Ron Shevlin, senior analyst for Aite Group in Boston, has been writing about the coming trend of gold-labeled products in financial services. "The Simple acquisition really confirms that for me."
According to Krajicek, Intuit will sell Mint to credit unions and banks. He said there is a value in a branded consumer experience, especially when it can be used in other channels.
"Obviously, Kasasa [which was developed by BancVue] is a branded product that is sold to community institutions, and there will be more such products emerging — and I think that is a good thing," he said. "Research shows consumers do not trust credit unions to have good products. Not that they do not have good products, but consumers do not trust them."
According to Krajicek, the use of branded products allows credit unions to own the member service experience, while saying: "We went out and found premium products to offer them to you."
"Consumers do not believe credit unions can build a kick-butt personal financial management product, but they know Mint," he said. "Institutions increasingly will not feel the need to name their own products — and who can name the name of their credit union checking account?
