Two credit unions are touting the benefits of migrating to an in-house card-processing solution.
“Having cards in-house allows for seamless integration between our online and mobile platforms, while simultaneously eliminating the need to rely on other third-party sites,” said TruStone Financial Federal Credit Union’s Vice President of Electronic Payments Lisa Zimbeck. “Throughout this process, we also gained back office efficiencies, while lowering expenses.”
After two years of development, $1.1 billion-asset TruStone Financial launched its in-house program in November of 2016. The $250 million Pathways Financial Federal Credit Union launched its program in June.
Both credit unions are PSCU clients and credited the tech vendor for assisting in the process.
“PSCU developed the concept that an in-house credit card program for Pathways could ‘ride the rails’ of our existing debit card program,” said Pathways Financial FCU President Greg Kidwell. The CU has 27,300 members, and supports 4,800 credit cards and 15,000 debit cards.
“The goals are primarily to streamline and enhance member service by having the credit card accounts directly on our core processing system, and accessible to members via online banking,” said Kidwell. “We are also anticipating that having the cards in-house will significantly reduce expenses associated with the credit card program.”
In-house benefits
In recent years, many credit unions have undertaken the process of determining whether an in-house credit program is the right fit, explained PSCU’s Director of Solutions Consulting Kristen Gibson. Credit unions that are IT-, call center- and compliance-heavy, she said, are most likely to “thrive” in the in-house credit space.
“We find that the largest credit unions in the market tend to embrace full-service credit solutions just as well as the smaller ones. Mid- to large-size credit unions are most likely to leverage or be interested in in-house credit solutions,” said Gibson. “While we see common themes across credit union asset size, this factor alone is not the sole driver for success with an in-house credit solution.”
Like Kidwell, Zimbeck explained that TruStone Financial FCU’s existing hardware was also “more than sufficient” to handle the conversion from full-service to in-house solution. She conceded, however, that minor system tweaks were required.
“We needed to add a module to our core system, which allowed for credit processing and software to automate the payment posting process,” said Zimbeck. “Our partnership with PSCU remains strong. We continue to utilize their fraud protection services, dispute processing and overflow calls.”
The CU currently has 106,000 members, 18,000 of which have credit cards and 65,000 of which have debit cards, noted Zimbeck. From a technology, training and staffing perspective, she said the conversion was a big undertaking.
“The conversion takes up resources across all channels of your institution,” she said. “So you need take time to really understand your credit card program and how it relates to the overall member experience.”
Post -conversion reality
Gibson explained that in-house credit unions “own” functions such as statement creation, lock box processing, card reissue decisions, and credit card promotion creation and management. She added that contact center/call center staffing is “one of the biggest” considerations for credit unions considering in-house credit.
While both CUs will rely on PSCU for fraud prevention and chargeback-processing tasks, part of the conversion process requires transferring ownership of the credit card program to the credit union’s member service representatives, explained Kidwell.
“In addition to MSRs taking and processing credit card applications, they will now also be setting up the credit card account on the core, as well as ordering the new plastics in the process,” said Kidwell. “In addition, they will also now handle all aspects of lost/stolen situations and initial fraud claims.”
After conversion, TruStone Financial FCU needed to add staff to its contact center “to accommodate an expected increase” in call volume,” noted Zimbeck.
“This increase in call volume was due to the membership being able to make a payment through online banking, rather than a third-party website,” she said. “Since implementation, call volume has steadily decreased and is back in line with our expectations.”
For credit unions interested in moving to an in-house card program, Gibson said the process generally takes a minimum six months. A successful conversion, she explained, may also require hiring and training personnel to deal with IT, compliance, products, back office and call center staff.
“Credit unions have more options than ever before when it comes to matching a credit card processing solution to the needs of the credit union and its members,” said Gibson. “It is worth noting that not all in-house/core solutions are created equal. It is vital for a credit union to understand features and flexibility to ensure the proper fit.”
