Visions - January 2006Click a headline below to view articles:
Digital Insight Partnership Delivers Compelling Benefits
PSCU Financial Services’ agreement with Digital Insight is not only big news; it’s also good news for member-owner credit unions. Under terms of the agreement, Digital Insight, an online banking provider for financial institutions, will outsource its tier one contact center support to PSCU Financial Services for seven years. PSCU Financial Services will service contact center-based lending activities using Digital Insight’s loan origination and decisioning engine, and will resell Digital Insight’s lending solutions, including its DeskTopLender Premium loan origination system (LOS). PSCU Financial Services estimates this agreement will generate $60 “This greement validates the
outstanding service levels offered by Revenue from Contact Center SupportThis taxable income creates an important revenue stream that will be used to develop new products and services to help credit unions succeed in the increasingly competitive financial services market. More than 80 contact center employees will be hired to guarantee responsive service to new and existing cardholders.Comprehensive Lending PackageAdding Digital Insight’s respected LOS to our suite of products equips credit unions with instant decision- making capabilities for loan requests coming from the Internet, contact centers and branch locations.
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| Target audience: Existing cardholders Timing: May and October 2006 |
Description: PSCU Financial Services has developed a sophisticated model that assigns credit line increases based on a cardholder’s credit score (furnished by the credit union) and the cardholder’s existing credit limit. This model is conservative, with a $2,500 maximum increase.
Value for credit union: Credit line increases have proven to both
increase outstanding balances and boost interchange revenue.
This model equips credit unions to achieve significant benefits while maintaining very low risk. Credit unions can opt to participate in one or both 2006 promotions.
New Account Acquisition
| Target audience: Members without a credit union credit card Timing: April and September 2006 |
Description: This direct mail pre-approved solicitation utilizes sound underwriting and risk management tools.
Value for credit union: PSCU Financial Services funds the upfront costs, and utilizes its scale to deliver cost-effective pay for performance marketing promotions. The company develops the creative design, prints the direct mail pieces and funds postage and credit bureau screening. The company also created an interactive tool, which contains features that are proven to influence response rates.
The industry’s average solicitation costs are in the $100 - $150 range per acquired account, so this program combines cost savings with
reduced risk. In addition, credit unions participating in a similar
program in 2005 achieved a 1 to 4 percent response rate, which is
significantly higher than industry averages. Credit unions can opt to participate in one or both 2006 promotions.
Account Activation
| Target audience: Existing cardholders with a zero balance, active card status, and no monetary transactions within the last 90 days. Timing: March and August 2006 |
Description: This promotion contains a credit rebate coupon for $10 if an inactive cardholder spends $100 or more in any billing period during
the three billing periods following the promotion. All cardholders need to do is bring the coupon into a branch or mail it in to receive the credit to their account (once the required charges have been validated).
Value for credit union: Based on past promotions, the anticipated response rate is 6 to 9 percent. This program is designed to assist the credit union in recapturing credit card members and conditioning them to use the card again. Credit unions can opt to participate in one or both 2006 promotions.
Schooling the Teachers—Credit Union Week: July 12 – 19, 2006
Expand your community outreach and business development efforts and help educate children about the importance of our form of government and our American values, at no cost to your credit union.
Log on to www.pscufs.com and click on Our Difference then Community Involvement to download applications for Credit Union Week. Submission deadline is March 15, 2006. We encourage you to distribute applications—you can even post them on your website—so that a local educator can take advantage of this unique educational opportunity.
Deadlines for Spring 2006 Promotions
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Account Acquisition April promo: January 24
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Account Activation March promo: January 24
- Credit Line Increase May promo: March 10
Credit Cards Earn Kirtland FCU PFI Status
Dave Seely’s goal is simple. He
wants his credit union to be the
primary financial institution (PFI)
for its members.
To that end, Seely, CEO of Kirtland Federal Credit Union in Albuquerque, N.M., and his management team have focused on credit cards as a critical element in building the loyal member relationships that lead to PFI status.
“We evaluated the importance of our credit card program based on its
influence on member loyalty and household profitability. Raddon
Financial Group data indicates that credit cards are vital to achieving higher usage of all loan services and greater household profitability,”
Seely reports.
An innovative and successful credit card program has achieved Seely’s goal, with 65% of members reporting that Kirtland FCU is their PFI, compared with an average of 43% for credit unions of the same size (based on Raddon Financial Group data). Kirtland leads its peers in other areas as well, with a 71% activation rate, outstanding balances of $31.6 million (growing at an annual rate of 15%) and a 1.1% delinquency rate.
Kirtland FCU achieved these impressive results by revamping its credit card program with attractive interest rates, a Platinum card, a cashback rewards program and ongoing promotions.
“The first step is to design card
offerings with competitive interest rates and value-added services like a rewards program and no fees,” Seely explains. “As we promote the cards, we find that members are very
receptive because we are giving them a package that they can’t get from other financial institutions.”
Kirtland FCU introduced variable rates and a Platinum card when it converted to PSCU Financial Services’ CreditAbility program. “With our previous processor, we had fixed rates that were very labor-intensive to adjust. This inhibited our ability to offer competitive rates. In contrast, the CreditAbility program is very flexible and PSCU Financial Services has adapted it to fit our evolving needs.”
The credit union issues Standard MasterCard plastics and Classic, Gold and Platinum Visa cards. Interest rates are assigned by tier. Seely is an advocate of rewarding cardholders with cash: payments are determined by purchase amounts.
He believes establishing and promoting a “no fee” policy is also important. “We don’t charge over-the-limit or cash advance fees. The only fee we have is for late payment. Our members appreciate this straightforward approach, especially if they have been subject to excessive fees from other card issuers in the past.”
Kirtland’s credit card promotions
include periodic newspaper
advertising as well as articles and
ads in its member newsletter and
on its web site. The credit union
participates in the optional program offered through PSCU Financial
Services in which they elect to contribute 1% of interchange income to Red Cross relief efforts.
“After hurricane Katrina, we took out a full-page local newspaper ad with the message: ‘Together we can help the victims.’ The ad showcased our credit cards and told readers that the more they used our card, the more we would contribute to disaster relief efforts. That was a very effective and timely way to build awareness of our credit union and our card program,” he notes.
Despite past success, Seely and his management team know that credit cards need continued attention. “You cannot develop a program and then ignore it for two years. Credit cards represent a dynamic market. We continually evaluate our product against competitive offerings and work with PSCU Financial Services to create new options for our cardholders.”
Kirtland FCU has $375 million in
assets and 35,000 members.
Top
Responding to Account Compromises
While the headlines in 2005 actively reported account data compromises occurring at merchants, a similar situation can happen within your own shop. If an account data compromise takes place within your credit union, you are required to notify MasterCard and Visa within 24 hours of the occurrence. If you feel a compromise has occurred at your site, immediately contact your Account Management Specialist. We will ensure that the proper notifications to Visa and MasterCard take place.
Flexibility with New MasterCard Card Designs
Thanks to new card design options, MasterCard
issuers now have more design space – up to
95.5% – on the front of the plastic to promote the credit union’s brand. To further differentiate plastics,
vertically-oriented card designs are now permitted.
With the alternative card design options, MasterCard issuers have the
flexibility to move the hologram and MasterCard Identification Area
retaining line to the card back. Another exciting option is to remove the
hologram altogether from the face of the card and use MasterCard’s new
HoloMag. The HoloMag integrates commodity black magnetic tape
with holographic film, linking the security of a hologram with the
functionality of magnetic tape.
While both the Hologram and HoloMag offer equal levels of security on the card, HoloMag is manufactured under secured conditions making it
difficult for counterfeiters to obtain.
Card Validation Code Moving Going forward, placement of the Card Validation Code (CVC2) will be embedded in the card body. This will eliminate the potential wear and tear of the validation code on the signature panel.
Register Now for the 2006 Member Forum
Our 2006 Member Forum, scheduled for April 5-7 offers attendees
nationally recognized speakers, informative breakout sessions, relaxing social events, a spectacular place to play golf—and most importantly, a great opportunity to network with your peers. And, our meeting is held at one of the most luxurious resorts in Phoenix. It doesn’t get much better than this!
We have a variety of speakers already lined up. Among them is Chip Filson, President, Callahan & Associates, Inc. who will be highlighting opportunities for credit unions. Albert Mensah, author and humanitarian, will be sharing his views on how to be an opportunist in today’s changing world. You will also not want to miss the discussion on how to execute a viable strategy from the Afterburners, former Fighter Pilots that know how to carry out missions when the stakes are high and failure is not an option.
We always get terrific feedback from our members regarding the value of our breakout sessions—and this year’s topics will not disappoint. Attendees will learn how to get the most out of their credit, debit and prepaid card programs, ways to increase data security, strategies for servicing Generation Y, what’s on the horizon for online bill payment and more.
So make your plans to attend our 2006 Member Forum at the JW Marriott Desert Ridge Resort & Spa in Phoenix, Arizona. You can register now online at www.pscufs.com. You have until March 6, 2006 to register—so don’t delay! We’ll look forward to seeing you in Phoenix.
