How Banks Will Help CUs' Bottom Lines in '11
TALLAHASSEE, Fla.-Credit unions will thank banks for bottom line growth in 2011, predicted Jim Park, who believes CUs will take checking and credit card share from the big boys.
The president of CU24 shared a perspective of many experts that credit unions should keep free checking and scoop up profitable long-term relationships as banks send checking customers running with fees. "If credit unions jump on the bandwagon-and I mean now-and promote free checking, they will bring in a lot of accounts."
Banks, too, are devaluing rewards programs and shedding debit rewards, noted Park, leaving opportunity to increase the attractiveness of credit union rewards. Park encouraged CUs to keep rewards, restructure debit programs to make them more affordable, and also reposition many debit rewards to focus on credit. "By redirecting members through rewards to use credit, credit unions will make more interchange. Durbin has not touched credit yet."
CU24 also offers an Internet debit program that allows consumers to use their debit card online and PIN entry is encrypted. Park said the program provides credit unions with another revenue source and a means to increase debit usage to help offset lost interchange revenue.
For the long term, Park advised beefing up technology, getting closely involved with social media, and aggressively going after the youth market.