PITTSBURGH-With Bank Transfer Day creating greater CU awareness, Omega FCU says now is the perfect time to get back into the credit card business.
CEO Troy Garvin is advising credit unions that have sold off their credit card portfolios to bring the business back in-house. His $85-million CU recently made the move and reached $1 million in outstanding credit lines in less than three months.
"That's twice what we projected," said Garvin. "And we have already issued more than 350 cards, taking close to $600,000 in outstanding balances already. All this has come with virtually no advertising. There is a lot of pent-up demand out there."
That demand is coming not only from new members, but from existing members who have been dissatisfied with the service they were receiving after the credit card portfolio was sold in 2006. "A lot of members were asking us to bring credit cards back in-house," said Garvin. "They said they liked the service much better when it was not provided through a third party."
Garvin said service with the third party had been a good "collaborative" effort with the credit union for a few years. But in the last two years that changed.
Members also wanted a card that was simple, Garvin explained. "They wanted a no-nonsense card-no rewards, just a straightforward line of credit with a good rate and service they can count on."
Omega's Visa card is risk priced with a variable rate tied to prime. At press time those with A credit received 8.99% APR, while C credit was charged 12.99%.
Important First Move
Important to bringing cards back in house was first moving its core processing to Fiserv Portico, said Garvin, which allowed Omega to more effectively cross-sell new cardholders and new members, as well as provide a high level of card service. OCU recently moved to a sales and service culture, Garvin explained, and Fiserv Portico flags teller and call center screens when members who present cross-sales opportunities stop by or contact the credit union.
Garvin said being able to access credit card data in real time was essential to bringing credit cards in-house. "If your members are complaining about the service they are getting from a third party, you better have your ducks in a row when you take this business back. With Fiserv's system we are not batch processing anymore. So if members come in or call about their card being declined, for example, we can see immediately why that has happened. Our tellers and MSRs do not have to access another system and within a few clicks they will have the answer for members."
Adding credit cards is helping reenergize and reshape the credit union's loan portfolio, which last year was almost at negative growth, shared Garvin. "For a number of years our loan portfolio was primarily mortgage based, at least half of it. But that changed with the recession. But we have had to change that and bringing credit cards back is something we needed to do."
