WEST PALM BEACH, Fla.-Industry analysts who spoke with Credit Union Journal had this advice for CUs to grow share.
'Control, Alt, Delete'
David Keenan, GM, ACCEL/Exchange network, Fiserv, Brookfield, Wis.
Make a fresh start: This is a "control, alt, delete moment," said Keenan. "It's a fresh start, a whole new economic environment for debit cards that will certainly play out through next April at least. As institutions make their branding choices in terms of merchant routing, this is a good time for credit unions to take a step back and look at what are their debit program goals to make sure the networks they are aligned with are in step with those objectives. Make sure they are aligned with networks that have the credit union's best interests in mind and can help them take advantage of all the noise and chaos."
Get 'Activated'
Ron Silvia, VP of debit, ATM and prepaid products, PSCU, St. Petersburg, Fla.
Increase debit activation and usage: Once the card is out there CUs must get members to activate and, use it, said Silvia, but they must first carefully review their interchange data. "That includes looking at how interchange has performed year over year, total purchase volume, number of accounts, number of inactive accounts . . ."
Silvia noted that PSCU has programs to help credit unions closely analyze their debit activity, including signature vs. PIN, profitability, and action per network. "You want to be able to say that if I increase my activation rate by 1%, if I increase two more transactions per active account, what does that mean. So the credit union has its eyes open, has all the facts, and knows that if Durbin hits them by a certain percentage, they know what they need to do to offset that. They now don't have to go down road of fees and dropping loyalty programs."
Educate, Educate
Stan Hollen, CEO, Co-Op Financial Services, Rancho Cucamonga, Calif.
Educate the consumer: Hollen stressed that as media reports about bank fees stir up consumers, credit unions must educate their communities that they have the reach similar to if not better than banks.
"I can't tell you how frustrating it is that reporters are very misinformed, uniformed, and are not doing their homework," said Hollen, stating that many of the TV reports may recommend CUs, "But they always say we don't have as many ATMs and the reach. It is a shame. So Co-Op is getting the word out that we have more ATMs than Bank of America, and surcharge free. On top of that is the shared branching program, 4,400 branches nationwide. That is a bit of irony . . . Much of the mainstream media that does financial reporting, if they are not a CU member, does not have a clue."
Never Say Never
Jeff Russell, senior advisor, The Members Group, Des Moines, Iowa
"A lot of the attention now is on banks implementing debit fees, and that is where the short-term focus should be. But the long-term focus should be on preparing for an environment in which we have to explicitly price the services we offer and make sure we are not just charging a standard service fee."
Russell added that interchange revenue will eventually decline for CUs and that long term the era of free checking is over. "Economics over time will begin to put pressure on credit unions to create a bundle of services members will be willing to pay say $2.95 for-unlike BofA just charging fees. Credit unions have to think about what other things they can offer that members will pay a couple bucks for, as well as how to provide services that create a real value for merchants beyond just the swipe."
Russell's final advice: never say "never" regarding fees. "We have to be careful. I don't know that we can say we will always have free debit and free checking."
'Shout It'
Bill Lehman, VP-portfolio consulting, CSCU, Clearwater, Fla.
"This is a great time to shout that you are keeping your programs the same. We can leverage the negative press on banks and grab share. I am not saying that down the road you can't tweak some things...to address non-interest income. But think of not making any moves now as a marketing campaign. Support that with strong messaging to members and prospective members and steal some market share."
