RIVERWOODS, Ill.-Credit unions can grow their credit card portfolios in 2012, but one person is suggesting that they will do better if they pair their card offerings with a hyper-local spin on rewards programs.
"We've historically found that some credit unions have not been as competitive as possible with rewards programs," said Kevin O'Donnell, VP of credit issuance at Discover.
O'Donnell advised working extensively with area merchants to offer rewards at the local level. "In some cases, those [business owners] may be members of the credit union," he said. "Promote things in the local community, because credit unions understand and live and work in that community, and they really understand the dynamics of that, so working with a local business is something that gives them a competitive advantage."
Another strategy: offer rewards through promotions built around local charities and nonprofit agencies.
O'Donnell pointed out that credit unions are trying to attract two distinct audiences with their credit card offerings-those who carry balances and those who pay them off each month-and card offerings should be tailored to each.
Regardless of the product being offered, it must still be competitive. CUs have made their name with great service, but "great member service in and of itself doesn't mean you're going to have new members," said O'Donnell. "You need good, aggressive, differentiated products to attain new members, particularly younger members."
O'Donnell also recommended that credit unions reevaluate their pre-paid card options to ensure that remains a competitive option for younger consumers or members who otherwise can't qualify for a credit card.
O'Donnell recommended embracing the mobile channel as a way to help attract younger consumers, while also engaging them via social media. But, he said, the social media message has to come from a similar perspective. "Trying to reach a 20-year-old [via social media] is not going to be very authentic if it's coming from somebody their parents' age," he said.
