Banks reengineer instant debit card issuance amid pandemic

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When First Midwest Bank started closing branches as states ordered residents to stay at home, it decided that instantly issuing debit cards was a critical service for customers. So the Chicago bank migrated the normally branch-only service to the drive-through.

“We wanted there to be no question that folks had full access to their funds,” said Jay Bernstein, the $19.8 billion-asset bank's business solutions manager.

When a customer’s debit card is lost, stolen or otherwise compromised, visiting the branch to get a replacement card printed and issued on the spot beats waiting a week or more for a new card to arrive in the mail. But with many branches diverting service to their drive-throughs, banks have had to come up with creative alternatives for customers to get new cards and choose a new personal identification number with minimal human contact.

 Jay Bernstein, vice-president, business solutions manager at First Midwest Bank
“We wanted there to be no question that folks had full access to their funds,” says Jay Bernstein, vice president and business solutions manager at First Midwest Bank.

Entrust Datacard, a seller of instant card issuance hardware and software, has more than 1,000 bank and credit union clients in North America. Before the pandemic started, nearly all cards that were instantly issued were handed over inside the branch, with the printer normally sitting right by the tellers, said Andy Cease, financial instant-issuance product manager at Entrust.

But the company has seen more than half of its clients shift to one of two workarounds since the last week of February.

The first is instant card issuance through the drive-through. In this case, tellers are in charge of verifying a customer’s identity and printing the card. They may deliver the card to the customer through a pneumatic tube or capsule pipeline. Then, instead of asking the customer to key in a PIN on the spot, the bank may instruct cardholders to choose a new PIN over the phone using interactive voice response or change it themselves at an ATM. Customer service representatives might enter a temporary one first so the cardholder can use the card immediately.

The second workaround is to let customers make appointments to drive up and grab the card in the lobby at an appointed time.

First Midwest, a client of Entrust, chose the first option. The bank shifted instant issuance to the drive-throughs across its network of more than 125 branches over the course of a few weeks, starting in March.

Since bankers normally handle instant issuance, the IT team had to make Entrust’s software available to the drive-through tellers by loading the vendor's CardWizard program onto their computers. The tellers also had to learn how to properly validate a customer’s identity. After delivering the card to the customer via a drawer or tube in the drive-through, the teller will input the new PIN, and the customer can change it later by phone.

Changing these procedures wasn’t difficult. But the drive-through method may not last past the pandemic.

“It’s always safer to do this in person,” said Bernstein. “The drive-up adds an element of risk — it’s a little easier to try and elude detection and provide false documents, which is why we and I’m sure many banks don’t do it as a normal course of business.”

First Midwest has started reopening branches in areas where stay-at-home orders have lifted or eased.

“We’ll review it when the pandemic is over and we go back to normal business,” Bernstein said.

Fiserv, a core banking software company that provides instant-issue hardware and software, has also seen some of its 600 customers that offer instant card issuance in the branches shifting those procedures to the drive-through.

Like Entrust’s clients, Fiserv’s clients had to find workarounds for customers selecting a PIN. Normally, the customer chooses and activates a PIN inside the branch, said Hal Cline, director of business development with the Output Solutions unit at Fiserv. Now clients are typically allowing their customers to activate the card and choose a PIN by phone, using interactive voice response.

One Fiserv client, Park Bank in Madison, Wis., offers instant issuance of debit cards at nine of its 10 branches and is expanding the number of branches where customers can get a new card at the drive-through. (This is a different Park Bank than the one in Milwaukee purchased this year by First Midwest.)

“Client and branch personnel safety was at the core of our decision to offer contactless instant issue services through the drive-through,” said Suzanne Johnson, vice president of branch banking at the $1 billion-asset Park Bank.

It has also been resourceful — and hygienic — when it comes to letting customers choose their PIN.

Using long cables, the banker or lead teller staffing the drive-through window sets the PIN-pad device in a drawer and feeds it outside to the customer. Park Bank has taken to protecting the device with a disposable plastic sleeve, so customers can pick up the device, take it into their car and enter a PIN before placing the device back in the drawer. The next customer gets a new plastic sleeve.

Richard Crone, founder of Crone Consulting, says there is a better way for consumers to get instant access to a payment vehicle that doesn’t even require driving up to a branch: mobile wallets.

“This is an opportunity for a whole new set of fintechs, challenger and neobanks who are using the COVID-19 crisis to provision accounts instantly and make them available immediately through one of the Pays," such as Apple Pay or Google Pay, Crone said. “When banks and credit unions are not even supporting a mobile wallet, they are vulnerable to challenger banks that are formed from the get-go to provision an account entirely in the privacy of your own phone and make spending capability immediately available through one of the Pays.”

For customers who do want a physical card, contactless cards are the safest way to pay right now, he said.

A survey by Mastercard in April found that 46% of respondents had swapped out their top-of-wallet card for one that offers contactless, and 74% of respondents said they would continue to use contactless after the pandemic.

Cease said many of Entrust’s customers are looking to move from a single interface payment card, where a chip must be inserted into the point-of-sale system, to a dual interface, which has both a chip and embedded antenna that enables contactless payments.

Neither First Midwest nor Park Bank currently offer contactless cards, but both allow customers to load their cards into mobile wallets.

Bernstein said First Midwest has no definitive plans at this point to start offering contactless cards, although it has been on his radar.

“The pandemic has made us think about it a lot heavier lately,” he said.

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